The learning objectives of the case are to (1) understand the link between supply chain structure and financial performance, (2) identify key drivers of supply chain performance and how they affect a firm's ability to respond during periods of strong or weak demand, and (3) develop the alignment between supply chain structure and strategic position for a firm.
To this end, the case highlights the supply chain structures and performances of three firms in the diamond retailing industry: Blue Nile, Zales, and Tiffany. Blue Nile’s supply chain structure is geared toward a pure centralized e-business; Zales sells merchandise primarily through stores but recently added an online channel; and Tiffany also uses an online channel but most of its diamond and other high-end products are sold through stores. The case is designed to foster discussion of the three supply chain structures and encourage students to evaluate the firms’ performance in terms of components of customer service such as response time, product variety, product availability, customer experience, order visibility, and returnability, coupled with cost factors that include inventory, transportation, information, and facilities.

1. What are some key success factors in diamond retailing? How do Blue Nile, Zales, and Tiffany compare on those dimensions?

As with most retailing, the key success factors in diamond retailing can be measured by customer service factors and cost factors. Given the varied supply chain components and supply chain costs. Blue Nile has a distinct advantage in product variety and product availability since customers can “build their own ring” by choosing from an inventory of about 75,000 stones. Customers purchasing at Tiffany and, until recently, at Zales have been limited to the inventory available at the store. Customers who are comfortable making large purchases online will