Destin Brass
Destin Brass Products Co.
June 26, 2010
CASE ANALYSIS OBJECTIVES
The Destin Brass Products Company case analysis focuses on the current accounting practices utilized by the company and its effects on product pricing. Destin’s president, Roland Guidry, is concerned about the pump market competition dropping prices and his company’s ability to remain competitive, yet profitable; since, pumps are 55% of Destin’s revenues. At the same time, the flow controller market remains seemingly untouched. The company’s controller, Peggy Alford, and manufacturing manager, John Scott, are charged with experimenting with a new accounting method that could more precisely cost each of Destin’s three products: valves, pumps, and flow controllers.
BACKGROUND
Destin Brass Products Company was founded by Guidry, Scott, and Steve Abbott, the current sales and marketing manager. After a conversation with the president of a large water purification equipment manufacturer, Abbott discovered an opportunity to produce high quality brass valves since the manufacturer was dissatisfied with the quality of brass valves currently available. Scott was known for his ability to create high-quality brass boat fittings for the fishing industry. Guidry was a veteran with a history of successful ventures, and Alford had manufacturing accounting experience. Thus, Abbott’s vision came to fruition when the group purchased a commercial machine shop in 1984.
Scott noted the mistakes of existing valve makers and decided that a skilled labor force, expensive machinery, or both, were required to maintain the necessary tight tolerances. Before long, Destin became the sole supplier of valves to its customer. Individual components were bought from foundries, with a just-in-time delivery agreement. After delivery, the pieces were precisely machined and assembled.
Yet, two Destin founders had bigger dreams than solely manufacturing valves. A market for brass pumps and flow controllers
June 26, 2010
CASE ANALYSIS OBJECTIVES
The Destin Brass Products Company case analysis focuses on the current accounting practices utilized by the company and its effects on product pricing. Destin’s president, Roland Guidry, is concerned about the pump market competition dropping prices and his company’s ability to remain competitive, yet profitable; since, pumps are 55% of Destin’s revenues. At the same time, the flow controller market remains seemingly untouched. The company’s controller, Peggy Alford, and manufacturing manager, John Scott, are charged with experimenting with a new accounting method that could more precisely cost each of Destin’s three products: valves, pumps, and flow controllers.
BACKGROUND
Destin Brass Products Company was founded by Guidry, Scott, and Steve Abbott, the current sales and marketing manager. After a conversation with the president of a large water purification equipment manufacturer, Abbott discovered an opportunity to produce high quality brass valves since the manufacturer was dissatisfied with the quality of brass valves currently available. Scott was known for his ability to create high-quality brass boat fittings for the fishing industry. Guidry was a veteran with a history of successful ventures, and Alford had manufacturing accounting experience. Thus, Abbott’s vision came to fruition when the group purchased a commercial machine shop in 1984.
Scott noted the mistakes of existing valve makers and decided that a skilled labor force, expensive machinery, or both, were required to maintain the necessary tight tolerances. Before long, Destin became the sole supplier of valves to its customer. Individual components were bought from foundries, with a just-in-time delivery agreement. After delivery, the pieces were precisely machined and assembled.
Yet, two Destin founders had bigger dreams than solely manufacturing valves. A market for brass pumps and flow controllers
References: Bruns, W.J. (1997). Destin Brass Products Co. Harvard Business School Publishing.