» Projects: Latin America / Caribbean

Global Value Chain (GVC) Analysis for Cuenca, Ecuador

This was the pilot study, sponsored by Corporacion Andina de Fomento (CAF), for a series of regionally focused programs designed to boost competitiveness of selected cities in Latin America.  This pilot project focused on a broad intervention in the city of Cuenca, Ecuador where, based primarily on a value chain analysis, CAF plans to prepare a comprehensive agenda around Cuenca’s two key productive sectors – wood furniture and household appliances (white goods).  By identifying and acting to mitigate constraints and bottlenecks along the respective value chains and bolstering the local supply chains for each sector, competitiveness of the two sectors will be improved in addition to strengthening the manufacturing base of Cuenca.

With focus on developing the local manufacturing base - hence increasing local content, particularly for the white goods sector - GDS conducted a detailed Integrated Value Chain Analysis (IVCA) of the wood and white goods sectors in Cuenca, Ecuador.  For each sector, analysis included identification of all suppliers/ stakeholders along each value chain and evaluation of suppliers’ capacities.  GDS executed a comprehensive cost analysis for all inputs and all stages of production along with corresponding lead times for inputs and processes.  The impact of timing was quantified, pinpointing specific cost components that could be reduced via local sourcing and through more efficient operations management.  Also included was a comprehensive analysis of institutional support for each sector (NGOs, international development agencies, development banks, government institutions, private sector, etc.) as well as detailed analysis of the regulatory environment covering all issues affecting the sectors, including specifying regulatory aspects hindering productivity and offering suggestions on policy measures required to enhance productivity and efficiency.  The results were benchmarked against global competitors and GDS provided to the client a detailed set of conclusions and corresponding recommendation.  The recommendations enumerated strategies for improvements in production management (particularly inventory control), improved product design and more efficient use of resources.  Recommendations also indicated the means by which local suppliers can be more effectively incorporated into the supply chains resulting in shortened lead times for manufacturers, lower inventory costs, reduced transportation costs and manufacturers’ improved control over inputs.