Nucor

960 Words4 Pages
Based on the case study “Nucor in 2009”, Nucor’s business strategy can be categorized as cost leadership. There are clear evidence in the case that shows Nucor using an integrated set of actions to produce at the lowest cost, while still maintaining an acceptable level of quality compared to their competitors. In this critique, the Value-chain model will be used to illustrate how Nucor aligns their activities to this business strategy.

I/ Primary structure
Regarding Inbound Logistics, Nucor has a highly efficient system to link supplier’s products with their production processes. They have long-tern contracts strong relationships with their suppliers like constructions companies and scrap steel suppliers all over the country who
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This substantially lower hiring cost, and related costs when there are bottlenecks or employees take leave.
Nucor’s compensation system is another extensively used tool to encourage productivity. A good mix of reward and punishment system sends a clear and consistent message out to employees of the desirable behaviours. Workers are motivated by the weekly bonuses that are promptly paid, which apply fairly to everyone.
Technology Development: Nucor invests rather heavily on technology that can help drive costs down. They were one of the first to use a computer inventory management systems to speed up delivery and calculate costs more accurately. This helps Nucor to save time and effort in tracking inventories.
Not only that, they are constantly looking for ways to innovate and improve more effective production processes. The building of mini-mills and twin shell furnace was heavily invested on, in terms of both capital and human resources, which improved Nucor’s productivity substantially. This means that Nucor could produce more steel given a shorter period of time and less resources. This leads to lower cost of production that does not compromise quality.
Procurement: Nucor engages an independent broker to manage and give recommendations on the most cost effective way in scrap purchasing. This ensures that Nucor always get the most suitable materials from the cheapest suppliers, since the broker is more knowledgeable about the raw materials market.

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