Why is GIA so slow?

[denverappraiser]

This is a question that plagues the industry. It’s costing the trade, and by extension consumers, a fortune. It’s costing GIA a fortune. I can just imagine what their insurance bill looks like. They’re quoting turnaround times from 2 to 4 months and that’s growing, not shrinking. This has been a giant industry problem for years. Meanwhile their competition, ranging from EGL-USA to IGI and AGSL are showing turnaround times in the neighborhood of 4 days. That’s without rush service. What gives?

GIA is a factory. They receive stones, process them through a bunch of workstations that do a variety of things, and then send them back to the client with the pedigree. It’s just like any other factory in that regard. It’s a popular service, and the excuse they give is that they have more work they can do and they’re hiring staff as fast as they can. They’ve added several new labs in the last few years, and they’ve expanded the New York space dramatically but the problem still seems to be growing. They can’t (or choose not to) handle the workload that they’re presented.

Look at it as a giant black box. The amount of time it takes to process a million stones is basically fixed. It takes a certain amount of time to do the actual work. It’s not a function of how long the stone has been sitting in their vault waiting for a turn at the graders. It has to do with how many workers they have, equipment, space and so on. It’s a logistical problem. More stones than capacity simply MUST change. This isn’t a matter of whining industry people, it’s just a fact. They can hire more workers and rent more space, they can change their systems to improve throughput, or they can make customers can go away. These are the only options. Allowing the vault capacity to grow simply indefinitely isn’t a choice and it’s a vote for the ‘customers go away’ option. Eventually folks will get tired of it. If it’s not 4 months, maybe it’s 6. Or 12. It’ll happen. It must happen. GIA surely knows this, and they’ve clearly decided it’s ok. Why?

I actually have some experience that may be relevant. I ran what’s called a trade shop. This is the workshop where things get sized, set, manufactured and whatnot on behalf of jewelry stores. We were pretty good and were fairly successful at it. Word got out, work flowed in and that made us busy. That busyness caused other problems. We had to hire more jewelers, buy more tools, hire more quality control people, make people work overtime and so on. Training became a problem. Turnover became a problem. It was (and is) decidedly difficult to assemble a team of the right people with the right skills armed with the right tools. We did that, and were still busy. That’s what you want in a business, right? That also made us late on work and it extended due dates. That upset the stores, who then took their work to other shops. That is to say, customers went away. Every jeweler worth a hoot has faced the same problem. It’s not that it usually takes 2 weeks to size a ring, or grade a diamond, it’s the line behind all of those other customers that causes the problem. In effect, it’s reducing the number of clients using the filter of those who were willing to wait. The customary solution for businesses with this problem is to raise prices. That reduces the number of clients too but the filter is now on who is willing to pay higher prices. From a business side, that’s obviously better. Same staff and expenses, more money. What’s not to love about that? That’s been on the table for every factory that’s faced this problem since Henry Ford.

So why doesn’t GIA do it? As part of the resolution to their ‘certifigate’ scandal, they actually LOWERED prices. They’ve expanded the number and variety of services, especially with regard to grading smaller stones. They’re doing the opposite of what Henry Ford would have suggested and they’re pissing off every single customer over it. They know all of this and they have plenty of people who are way smarter than me. GIA is supposedly a college. That’s why they’re a non-profit. They train gemologists to do exactly this. Then they undermine their graduates. It's undermining their whole purpose as well as the industry and I think the real reason is that there is SO much money flowing.

How about this:
1) Raise your prices. Laugh on the way to the bank.

2) Use your formidable advertising budget to support jewelers, your alumni, rather than the lab.

3) Use that extra non-profit that comes from those higher prices to improve the education in the school so that more of the jewelers deserve your support and, yes, certify gemologists. That means continuing education, testing, and a system for resolving disputes. Set standards, enforce them, and revoke the credentials of those who don’t measure up to them. Offer a 'higher' credential than GG.

4) License other labs. That’s right, give the GIA ‘stamp of approval’ on labs that meet your standards, and withhold it from those who don’t. Think UL approval. Make them pass tests, inspections, and procedural analyses to keep the name. Submit stones at random, and penalize them if they don’t hold the standard. Pull the license/franchise from those who can't or won't measure up. Charge ‘em. They’ll pay. You've got the most valuable name in the industry. Lab standards will improve. Jewelers will improve. Consumers will be BETTER protected. That’s the GIA mission, isn’t it?

 

[John P]

Neil,

Did you hear, and what do you think about, the comment that GIA's turnaround time has slowed in-part because of the need for greater screening for MMDs among all natural diamond submissions?

 

[John P]

4) License other labs.

This is a darned if you do / darned if you don't prospect:

If you don't, and don't find solutions elsewhere, you're criticized for keeping the secret sauce so secret that people starve. If you do, and it spreads beyond your initial ability to control, you lose significant market-share.

I love the transparency of the AGSL. But their willingness to license their PGS, which is an educational boon for the gemological community, has not necessarily caused more diamonds to be sent to AGSL. In fact, it might be the opposite.

 

[Karl_K]

I love the transparency of the AGSL. But their willingness to license their PGS, which is an educational boon for the gemological community, has not necessarily caused more diamonds to be sent to AGSL. In fact, it might be the opposite.

On the other hand a cutter knowing a stone will get the 0 for LP increases business.
Judging by some of the weird ags0 combos popping up someone big or several smaller cutters are running it on their entire production.

These days when more and more diamonds are first sold off the wheel with a grading report the labs customer is the cutters.

 

[Karl_K]

How about this:
1) Raise your prices. Laugh on the way to the bank.
The value of GIA is mind share and market share. Less more expensive has the potential to devalue the gia brand and open the door to a competitor. Which is weird that they have let the backlog build because that does the same thing. Maybe they feel that cutters don't have an option and for some stones the reality is they don't.

2) Use your formidable advertising budget to support jewelers, your alumni, rather than the lab.
there are some non-profit rules that might effect that.

3) Use that extra non-profit that comes from those higher prices to improve the education in the school so that more of the jewelers deserve your support and, yes, certify gemologists. That means continuing education, testing, and a system for resolving disputes. Set standards, enforce them, and revoke the credentials of those who don’t measure up to them. Offer a 'higher' credential than GG.
YES!!!!!!!

4) License other labs. That’s right, give the GIA ‘stamp of approval’ on labs that meet your standards, and withhold it from those who don’t. Think UL approval. Make them pass tests, inspections, and procedural analyses to keep the name. Submit stones at random, and penalize them if they don’t hold the standard. Pull the license/franchise from those who can't or won't measure up. Charge ‘em. They’ll pay. You've got the most valuable name in the industry. Lab standards will improve. Jewelers will improve. Consumers will be BETTER protected. That’s the GIA mission, isn’t it?

I am not so sure about this one it could quickly spiral out of control. I think they are better off keeping it in house. However buying up other labs might be a good strategy.

 

[Texas Leaguer]

Alot of thought provoking ideas there Neil. I am not sure that GIA thinks quite that far "out of the box"! It will be interesting to see if the new leadership at GIA will make changes in direction.

Regarding the idea of buying or licensing other labs, I doubt they would consider this. I think they have had their hands full just managing their own collection of labs.

Here's a thought. The sister organization of GIA is AGS and do many cooperative things. They were established by the same people for slightly different purposes. The GIA for education and gemological services and the AGS to promote retail best practices, ethics and consumer protection. Now that AGS has their own lab with shared grading practices along with specialized services, why would GIA not want to use some of their marketing muscle to elevate awareness of AGSL?

If GIA was to license other labs or partner with them, AGSL would have to be number one on the list. But I think they could do much to support AGSL short of that. And I don't see where it would be a conflict of interest. It would certainly be good for the marketplace and good for the consumer.

 

[denverappraiser]

The franchise model works in many other industries but it’s especially common in food services. McDonalds quality standards are quiet uniform, extremely specific, and the company maintains an iron grip on it even though most of the restaurants are independently owned. The same applies to Starbucks, Wendy's, and many many others. I dare say that’s the typical way to quickly ramp up production and distribution in a big way while maintaining quality control. It also allows for flexibility when things go south. Closing a franchise or 2 is nothing like the pain of pulling back the whole corporate behemoth.

The UL model is a bit less widely practiced but is also very successful. If you want to make, say, medical machines, you MUST have FDA approval and to get that you MUST have UL approval. UL is a private company that enforces standards for things like product safety. They’re highly transparent in what they do, and nearly everyone respects their authority. Even on things where it’s not legally required, their little sticker is highly valuable. Why can’t GIA do this? Wanna call it an SI-1? That call is subject to GIA review, the lab and the procedures that are making the call are subject to their inspection, and a fee is charged for the privilege. Maybe even a bond is required. They’re not overseeing every stone, they’re overseeing the lab.

I agree, AGSL seems like a good first stop but actually some of the other big players come to mind too. How about EGL-USA? They have some highly skilled gemologists and a well equipped lab but what I would call a flawed business model. Partnering with GIA in some manner seems like the solution to both of their problems. How about GCAL? That’s a quality lab that most people have never even heard of.

 

[pyramid]

Neil,

Did you hear, and what do you think about, the comment that GIA's turnaround time has slowed in-part because of the need for greater screening for MMDs among all natural diamond submissions?

Don't know about other consumers but this is already putting me off buying anymore diamonds.
Especially anything under 1 carat and still apprehensive about a 1 carat or plus with a lab report.

 

[denverappraiser]

Neil,

Did you hear, and what do you think about, the comment that GIA's turnaround time has slowed in-part because of the need for greater screening for MMDs among all natural diamond submissions?

I think it's bull. The first level of screening for synthetics involves a straightforward test that rules out upwards of 95% of the stones as even potentially synthetic. The equipment is a bit expensive, which is why jewelers don't have it, but it takes about 5 seconds. That's about the same amount of time as weighing it. For the ones that fail, you can eliminate another 90% or so by simply looking at the inclusions, something they do with every stone anyway. Nearly anything below, say SI1, is easy. Yes, there are a few that are difficult, and they get routed through a different department in the lab, but no, this is not a valid excuse for the delay on the vast majority of stones that flow through the lab.

 

[Rockdiamond]

Really interesting discussion- and you make some great points Neil.
There's certainly no easy answer.
I would question how this hurts consumers.
In a sense, it's the cutters, and stock dealers who are footing this bill.
There's an ample supply of GIA graded stones on the market at any given time, so it's not like a consumer needs to wait for that 1.50 G/SI1 ( or whatever) due to GIA's snail-like turn around times.
This supply situation also prevents GIA's timing to greatly affect market prices of diamonds.

About doubling fees-consider that part pretty much accomplished.
It's called SDS- same day service.
I'd bet that SDS accounts for a large percentage of stones submitted, and the dealers are paying double for this privilege.
This also exacerbates the problem as it makes all the sense in the world for GIA to focus on increasing the SDS business- therefore worsening "normal" turn around times.

 

[denverappraiser]

How does it hurt consumers? Great question. You’re correct, nearly every stone is submitted by a dealer. So who cares? Here’s a few examples of how this hits consumers:

#1 Money. All of this costs money, and ALL money comes out of the consumer at the end. That’s Econ 101. This may seem like a contradiction to my suggestion of raising prices but a fair number of the costs are hidden. If GIA ties up your working capital for 4 months, dealers need to make as much in that 4 months as they would doing something else with it, right? Otherwise,why do it? How much does that cost? 1%/month? No, the bank won’t pay you that but that’s not the way working capital goes. We’re talking about big money and small businesses. 12% internal ROI on working capital is cheap. Heck, 15% is cheap. For a $10,000 stone, we just raised the price to the consumer by $400. Maybe more.

#2 Risk. The assumption that diamond prices will always go up is simply not correct. A stone locked up in GIA’s vault is NOT the same as money in the bank, even if the dealers talk themselves into that. Market drops or fashion changes mean money lost. That’s their problem but these things are run by accountants, and accountants want to offset risk with money. That's in Econ 102. How much money? 1%? 2%? Who knows? It’s different for each dealer but the point here is that it’s not zero. As with the above, realistically we’re talking about hundreds of dollars per stone to get the beancounters on board.

#3 Sending diamonds worth thousands of dollars to GIA to sit on for months is an activity for big players. The longer the delay, the bigger they need to be. Just 10 stones a week worth an average of $5000 each means something like $800,000 tied up just in the logistics of the system! Most jewelers are small businesses and this is simply not a reasonable scenario. They HAVE to add a middleman to the deal when they buy things from the public. That’s good for the middlemen, but not the jeweler, and not the consumer. The difficulty of private sales goes up, and prices realized in dealer sales goes down.

 

[Modified Brilliant]

I remember a while back about a discussion about how AGSL was not as well known as GIA because of weakness in marketing. If AGS had been more aggressive and marketed themselves as also an "authority," maybe this situation wouldn't have happened. They certainly have the credentials and respect of the industry. There just seems to be some sort of denial among diamond dealers that only diamonds with GIA reports sell even though consumers here know that is untrue. GIA knew this was coming and instead of being pro-active they are now forced to be reactive. It's hurting everyone.

 

[denverappraiser]

I’ve been trying to decide where the bottleneck is. Obviously I don’t know but, realistically, there can’t be much more than 15-30 minutes of labor that goes into grading and documenting a typical stone. They need to weigh it, Sarin it, plot it, color grade it, fluorescence grade it, and make the call on clarity, color and polish. Maybe repeat a few of these a couple of times and maybe a girdle inscription. Each stone is tested for HPHT and synthetic origin as well as a few unknown secret tests. Add some logistics for receiving and sending shipments, printing reports, collecting bills and so on and we’re still under an hour. Probably quite a bit under. We KNOW that they unpack it, log it in, weigh it, and probably test to make sure it's a diamond, and do some sort of pre-evaluation on the very first day. This would be necessary for their own insurance if nothing else. So what we’re talking about is a line behind other customers for your turn at the other stations. Since none of those things have anything to do with the results from the 1st day work, how about this?: Take a lesson from popular restaurants or the airlines and take reservations. Book a time to have your stone graded but you can keep it in your own vault. If you get tired of waiting and decide to sell it, you can submit a different stone for your time slot or you can pay a penalty for cancellation. Heck, that turns the line into a profit center. For the people doing the actual work it doesn’t make a bit of difference any more than it matters to the chef or the pilot how far in advance you made your reservation. It’ll save them buckets of money on insurance if nothing else. The customers will be happier because they can still show the goods and, if needed, even sell them for paying a reasonable penalty. They could even sell them WITH the reservation. Win/win.

 

[John P]

Don't know about other consumers but this is already putting me off buying anymore diamonds.
Especially anything under 1 carat and still apprehensive about a 1 carat or plus with a lab report.

RE MMDs: Don't worry. The major labs all have detection capability. And all are vigilant. Candidly, I'm told that detection of treatments like HPHT (etc) is much larger and time-consuming in scope.

Bottom line, for present: If you have a grading report from a major lab you have the greatest possible assurance of natural origin and no undocumented treatments or enhancements.

 

[John P]

...If AGS had been more aggressive and marketed themselves as also an "authority," maybe this situation wouldn't have happened. They certainly have the credentials and respect of the industry...

This will be the second time this week I've referenced this thread. It may be interesting to you Jeff?

RE: The pervasive retail culture blocking your (correct) assertions above.
https://www.pricescope.com/communit...g-in-the-future.145819/#post-2632133#p2632133

 

[Karl_K]

I’ve been trying to decide where the bottleneck is. Obviously I don’t know but, realistically, there can’t be much more than 15-30 minutes of labor that goes into grading and documenting a typical stone.

It would be interesting to learn what the process is but they are not going to tell anyone.
For this type of work your process is going make or break you.
The need to accurately track stones from one end to the other certainly makes it harder to develop an efficient process.

 

[30yearsofdiamonds]

There are several bottlenecks, but the biggest is the color grading step. The lab can have a thousand diamond graders, grading for clarity, polish , symmetry etc. If 500 graders are what is called the preliminary grader and 300 are double checkers, with 200 being QA graders. (Bare with me on this. I lived it.) Lets say a preliminary grader on average can grade 20 diamonds per day x 500 = 10,000 diamonds. The next process is double checking where 300 double checkers need to check 10,000 diamonds for an average of 33 per day, which can be done. The next step is QA where 200 QA graders need to check 10,000 stones, which is 50 per day, which also can be done.

Now lets factor in color grading;
1. The NY lab has 6-8 color master sets, plus they have a machine that grades diamonds and the CB lab probably the same, so lets say for 1000 graders there are 16 master sets,
2. Two color graders can as a team, grade about 50 diamonds in an hour and if they are consistent with each other they will agree 80% of the time, that means they they will complete about 40 per hour.
3. If all 16 sets are running continuously for 8 hours,(which doesn't happen) they would complete 5,120 diamonds and 1280 would need one additional grader to complete the color grading process.
4. There are still and additional 3600 from the full day of clarity grading left over to color grade.

The point is that they can only complete for a day the total # of stones that they can color grade in a day.

Not every grader is allowed to color grade.
Factor in the time it takes to complete split grades by a third grader.
Factor in all the color rechecks.
Factor in the rush stones and stones over 4 cts.
Factor in fatigue, vacations, sick days, lunch, etc.

And you continue to build a backlog

 

[denverappraiser]

One of my approaches to this sort of problem is to try and find a corollary of other industries that have faced similar issues. Skyrocketing demand is an admirable problem but it’s hardly unique. As mentioned above, if you don’t address the supply side, the demand side will address it without you. I keep coming back to food. Their problem is actually worse because the product is perishable but standardization is everything and it’s all about producing the goods on schedule. They want your experience at a McDonalds (for example) to be the same no matter where you go, and they work really really hard at this. They don’t claim to be the either the best or the cheapest burgers, but a quarter pounder in Chicago is going to be just like a quarter pounder in Arizona and both will be just like the one you got last week. That’s their power. This isn’t a coincidence and NONE of them are prepared by an actual McDonalds employee. The restaurants are separately and mostly locally owned. McDonalds isn’t in the business of selling hamburgers at all. They sell restaurants. They sell tools and supplies for restaurants. They train people how to run restaurants. They help people fix broken restaurants when they screw things up. They help restaurateurs navigate the various licenses and permits that are going to be required. They use their advertising to promote the entire chain, not just corporately owned restaurants. They don’t care if you buy in Chicago or Phoenix, just buy a burger. Would you like French fries with that? If a particular restaurant doesn’t hold the standard, they get whacked. Quickly and hard. The home office can shut them down, pull their franchise, cut off the source of supplies, or force a sale. This too is something they’re VERY serious about. They do everything they can to help franchisees succeed but, in exchange, franchisees toe the line exactly.

The thing is, that started out the direction of GIA’s model. They were founded as a college for training jewelers. The whole point was to empower their alumni, your local jeweler, to have the knowledge to identify and grade stones. They were about making better jewelers. An entrepreneur would set up a store wherever they wanted, and GIA would sell them the tools and the knowledge to succeed at it. The founders formed AGS to dovetail with this precisely to enforce the ethics and professional conduct component. To be an AGS store and promote that membership you had to agree to and comply with their code of ethics and their rules on things like advertising and honest dealing. They would check up on you. If you didn’t measure up, AGS could and would pull your membership. That was a leg up against those other jewelers who weren’t on board.

GIA has changed. They’re in the lab business now, and despite how their website is laid out, the school is actually a rather small sideline of what they do. In 2010, the most recent year I see the filings for, they brought in roughly $160M. Only $12M of that came from running the school! This is not a school that runs a lab, it’s a lab that owns a school. The difference is important. The job of the school is to make jewelers. The job of the lab is to sell services. The business model of a school is to make their students as skilled and as marketable as possible, while the model of the lab is to make themselves as critical as possible. The lab model is winning big time and current backlog is a side effect of their success.

AGS has changed too. They still have member firms, and they’re still very serious about maintaining ethical business standards and quality practices amongst them. That vigilance still benefits the jewelers, their suppliers, and the public. They’re in the lab business too, but here’s the difference. According to their IRS filing, in that same year, 2010, they brought in $2.8M total. Only $440k of that came from the lab. That’s not chump change, but 77% of their income came from pursuing their stated mission as opposed to GIA’s 8%.

GIA’s 2010-990
https://bulk.resource.org/irs.gov/eo/2011_11_EO/95-3797687_990_201012.pdf

AGS’s 2010-990
https://bulk.resource.org/irs.gov/eo/2012_07_EO/95-1409272_990O_201111.pdf

 

[Texas Leaguer]

Neil,

Did you hear, and what do you think about, the comment that GIA's turnaround time has slowed in-part because of the need for greater screening for MMDs among all natural diamond submissions?

I think it's bull. The first level of screening for synthetics involves a straightforward test that rules out upwards of 95% of the stones as even potentially synthetic. The equipment is a bit expensive, which is why jewelers don't have it, but it takes about 5 seconds. That's about the same amount of time as weighing it. For the ones that fail, you can eliminate another 90% or so by simply looking at the inclusions, something they do with every stone anyway. Nearly anything below, say SI1, is easy. Yes, there are a few that are difficult, and they get routed through a different department in the lab, but no, this is not a valid excuse for the delay on the vast majority of stones that flow through the lab.

I stopped by the GIA booth at JCK and they were showing the current model of the device that screens for HTHP and synthetic. According to the rep, it is based upon Infrared Spectroscopy and supplies alot more information that the Diamondsure. Therefore, there are significantly fewer false positives that have to be referred for more advanced testing. The price of the machine is $23K. He said it was mainly diamond bourses and labs buying them.

 

[denverappraiser]

There are several bottlenecks, but the biggest is the color grading step. The lab can have a thousand diamond graders, grading for clarity, polish , symmetry etc. If 500 graders are what is called the preliminary grader and 300 are double checkers, with 200 being QA graders. (Bare with me on this. I lived it.) Lets say a preliminary grader on average can grade 20 diamonds per day x 500 = 10,000 diamonds. The next process is double checking where 300 double checkers need to check 10,000 diamonds for an average of 33 per day, which can be done. The next step is QA where 200 QA graders need to check 10,000 stones, which is 50 per day, which also can be done.

Now lets factor in color grading;
1. The NY lab has 6-8 color master sets, plus they have a machine that grades diamonds and the CB lab probably the same, so lets say for 1000 graders there are 16 master sets,
2. Two color graders can as a team, grade about 50 diamonds in an hour and if they are consistent with each other they will agree 80% of the time, that means they they will complete about 40 per hour.
3. If all 16 sets are running continuously for 8 hours,(which doesn't happen) they would complete 5,120 diamonds and 1280 would need one additional grader to complete the color grading process.
4. There are still and additional 3600 from the full day of clarity grading left over to color grade.

The point is that they can only complete for a day the total # of stones that they can color grade in a day.

Not every grader is allowed to color grade.
Factor in the time it takes to complete split grades by a third grader.
Factor in all the color rechecks.
Factor in the rush stones and stones over 4 cts.
Factor in fatigue, vacations, sick days, lunch, etc.

And you continue to build a backlog

Dan,

Thanks. I was hoping you would comment. I suspected color was the issue but why hasn’t it been addressed? Hiring workers with the appropriate vision shouldn’t be all that hard and training is what they do so the problem, as you point out, is mostly a matter of getting and deploying the tools. That is to say, color masters. THEY are the source of these things. To make a new master set they need to carefully pick 17 stones, pay for them, and document them. I know lots of appraisers who struggle with this because it’s a bit expensive but GIA is more prepared than anyone on the planet to do it. Replicating the lighting environment is tricky but, as with the above, GIA is better prepared to do this than anyone anywhere on earth. If a master set costs, say, $50,000, and that’s the bottleneck, why not expand that 8 set lab to 100? They’ve got the money. They have access to the supply. They even have the space. Obviously they have the incentive.

 

[denverappraiser]

The fatigue issue you describe is another one that doesn’t seem all that hard to address, at least in part. Let’s say a worker can do 2 one hour shifts at the color grading station. That means they put in 6 hours doing something else. OK. What’s wrong with that? There’s lots of work to be done ranging from plotting to bookkeeping to programming to security out in the parking lot. What’s appropriate won’t be the same for every staff member but the idea that a team member does several different things is hardly unique. That's why it's a team. I would also point out that it’s not necessary, or even desirable, that everyone work the same 8 hour shift. Certain departments, like shipping, are driven by outside schedules while some, like color grading, plotting and bookkeeping, are purely an internal decision. Running 2 shifts on that department so that the tools and equipment gets better usage, doesn’t strike me as an unreasonable option that would literally double the daily throughput. A fair number of workers actually PREFER this by the way. I don’t know about New York but a 4:00am to noon shift may very well be a popular with folks in California who have to deal with traffic conditions. An unusual schedule can save them literally hours a day spent in the car and getting off early can be extremely helpful for people with children. One spouse prepares the kids for school and the other picks them up when they're done as well as deals with the soccer practice and whatever.

 

[Texas Leaguer]

The fatigue issue you describe is another one that doesn’t seem all that hard to address, at least in part. Let’s say a worker can do 2 one hour shifts at the color grading station. That means they put in 6 hours doing something else. OK. What’s wrong with that? There’s lots of work to be done ranging from plotting to bookkeeping to programming to security out in the parking lot. What’s appropriate won’t be the same for every staff member but the idea that a team member does several different things is hardly unique. That's why it's a team. I would also point out that it’s not necessary, or even desirable, that everyone work the same 8 hour shift. Certain departments, like shipping, are driven by outside schedules while some, like color grading, plotting and bookkeeping, are purely an internal decision. Running 2 shifts on that department so that the tools and equipment gets better usage, doesn’t strike me as an unreasonable option that would literally double the daily throughput. A fair number of workers actually PREFER this by the way. I don’t know about New York but a 4:00am to noon shift may very well be a popular with folks in California who have to deal with traffic conditions. An unusual schedule can save them literally hours a day spent in the car and getting off early can be extremely helpful for people with children. One spouse prepares the kids for school and the other picks them up when they're done as well as deals with the soccer practice and whatever.

Neil, if GIA is looking for consulting services to help fix their problems, you may soon be getting a call.

 

[30yearsofdiamonds]

Couple of quick comments, even though I could write pages.

Graders almost never do more then an hour a day color grading.

Each grader has a station with their own microscope focused for their own eyes and personal items in or around the desk, so using the same station for two people would cause issues.

It does take months for them to compile a new master set, but still it could be done. They could also create procedures that would utilize one master set as two, by splitting the set E-I, and J+. To do this the first color grade would have to be known in order to separate hundreds of stones into two color categories.

They are utilizing machines for nearly every diamond dossier stone.

 

[Texas Leaguer]

Couple of quick comments, even though I could write pages.

Graders almost never do more then an hour a day color grading.

Each grader has a station with their own microscope focused for their own eyes and personal items in or around the desk, so using the same station for two people would cause issues.

It does take months for them to compile a new master set, but still it could be done. They could also create procedures that would utilize one master set as two, by splitting the set E-I, and J+. To do this the first color grade would have to be known in order to separate hundreds of stones into two color categories.

They are utilizing machines for nearly every diamond dossier stone.

Dan, could you elaborate on that last statement? With regard to color, my understanding is that a baseline reading is taken with a machine but the official call is made by a human grader or graders. Are you saying they are relying entirely on automated color grading on dossiers?

 

[30yearsofdiamonds]

Info that came my way is that on diamond dossier stones, two color grading machines are used to find an agreement on color and if there is a split then human eyes will decide with an opinion. But, maybe someone has heard differently?

 

[Rockdiamond]

How does it hurt consumers? Great question. You’re correct, nearly every stone is submitted by a dealer. So who cares? Here’s a few examples of how this hits consumers:

#1 Money. All of this costs money, and ALL money comes out of the consumer at the end. That’s Econ 101. This may seem like a contradiction to my suggestion of raising prices but a fair number of the costs are hidden. If GIA ties up your working capital for 4 months, dealers need to make as much in that 4 months as they would doing something else with it, right? Otherwise,why do it? How much does that cost? 1%/month? No, the bank won’t pay you that but that’s not the way working capital goes. We’re talking about big money and small businesses. 12% internal ROI on working capital is cheap. Heck, 15% is cheap. For a $10,000 stone, we just raised the price to the consumer by $400. Maybe more.

#2 Risk. The assumption that diamond prices will always go up is simply not correct. A stone locked up in GIA’s vault is NOT the same as money in the bank, even if the dealers talk themselves into that. Market drops or fashion changes mean money lost. That’s their problem but these things are run by accountants, and accountants want to offset risk with money. That's in Econ 102. How much money? 1%? 2%? Who knows? It’s different for each dealer but the point here is that it’s not zero. As with the above, realistically we’re talking about hundreds of dollars per stone to get the beancounters on board.

#3 Sending diamonds worth thousands of dollars to GIA to sit on for months is an activity for big players. The longer the delay, the bigger they need to be. Just 10 stones a week worth an average of $5000 each means something like $800,000 tied up just in the logistics of the system! Most jewelers are small businesses and this is simply not a reasonable scenario. They HAVE to add a middleman to the deal when they buy things from the public. That’s good for the middlemen, but not the jeweler, and not the consumer. The difficulty of private sales goes up, and prices realized in dealer sales goes down.

In terms of market prices to the consumer- and how GIA's lethargic turn around has affected them- I disagree with you Neil.
It's an interesting discussion, and if anyone would like to see GIA get their poopies together on this issue, it's me.
It's definitely costing my company money.
BUT- none of the effects you cite are actually hitting consumers.
In fact, for consumers, selection is greater than ever, and retail diamond prices are incredibly low. Probably as low or lower than they've ever been ( in inflation adjusted dollars)
The $400 increase in price you cite in your example #1 won't fly.
When the stone comes to market, it meets hundreds- if not thousands of competing stones already there.
If it's a truly desirable stone, compared to a less desirable one with exactly the same GIA grade, the difference will be far greater. So the dealer will look at the stone and price it accordingly. But the cutter or dealer offering that stone can't add $400 to cover GIA turn around time as such

#2 example is a possibility- but not a reality of the market for the past five years.
Very few people can claim losses due to the list going down while waiting for their stone over the past five years- as very few items on the list have dropped over this period.

#3- this is a cost of doing business today. The biggest players have so much skin in the game, the total numbers might be substantial seen out of context, yet the overall effect on consumer prices is nil. $800k might sound like a lot of money- but not necessarily if it's in the context of a $100 million dollar business.
You use the term " most jewelers are small businesses" and maybe this is still true- but its also true that most small jewelers can't sell diamonds nowadays- they've been hurt by far more pervasive changes in the industry than GIA slow turn around times.

This is all part and parcel of the "telescoping" that the internet has facilitated.
My feeling is that the overall collapse of the brick and mortar retail jewelry segment has hurt consumers- and all of us in the trade-at the same time it's made things better and easier for consumers.
No one needs to go to a jewelry store to buy a diamond anymore.
One way this hurts all of us is it hurts local economies.
The increased efficiency of online sales comes without some side effects. So consumers may be getting hurt by these changes- but not by higher prices due to GIA turn around times.

 

[pyramid]

Is color grading done under artificial light now? It is just that I remember the late Rockdoc saying that color grading was only
carried out by GIA between 12noon and 2pm in a room with a north facing skyline.

Interesting this discussion.

I wish 30yearsofdiamonds would write pages about this as he said he could!

 

[denverappraiser]

What you’re describing now is a corporate culture issue. I’m not unsympathetic, everybody has 'em but, at the same time, I’m not buying it as an excuse either. A workstation used 1 hour a day, or even 8 hours a day, is a waste of space. If you’ve got enough room and enough tools, that’s ok, but if space and/or tools are limited and that’s causing a bottleneck for others in the system then it’s entirely appropriate to share. Keep your personal stuff in a locker or a drawer. Readjust your chair and microscope at the beginning of your shift. Here’s another corollary, since I like these things. A particular police officer will drive the same car everyday and will get good at the minutia of that particular vehicle. They probably even practice on the driving range in that particular car. That’s good. It makes for better cops and I"m all for that but there’s another cop driving that same car at night. She too is good at the minutia and also practices with it. Yeah, they both have to readjust the seat and mirrors at the start their shift and bring along their own fuzzy dice if they want but that’s their problem, not the department’s.

Bryan. I”ll be holding my breath in antici …….. pation.

 

[Karl_K]

One way it hurts consumers is it sends more business to second tier labs particularly from small dealers.
I have talked about this with a local jeweler who went from all GIA to mostly egl-usa reports.
He buys his smaller diamonds in lots with factory grading then has them lab graded.
He does use AGS for larger diamonds but feels they are not competitive under .75ct.

 

[30yearsofdiamonds]

Here is a picture of what a color grading station would look like with computers set up on each side of the diamond lite which you see in the center. Today at GIA they use the DiamondDock lite, but the rest is pretty much the same.