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Supply Chain Management of EBSCO Industries, Inc.

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Supply Chain Management of EBSCO Industries, Inc.
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Netra Shetty
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Supply Chain Management of EBSCO Industries, Inc. - December 30th, 2010

EBSCO Industries, headquartered in Birmingham, Alabama, is a privately held, widely diversified corporation and the largest subscription agency in the world[according to whom?]. It was founded in 1944 by Elton Bryson Stephens (hence the EBSCO acronym Elton B Stephens COmpany). EBSCO is the largest privately held company in Alabama and one of the top 200 in the nation, based on revenues and employee numbers, according to Forbes Magazine.[1] In 1997 sales surpassed $1 billion. In 2006 sales exceeded $2 billion. EBSCO is a diverse company which includes over 30 businesses:

Private Company
Founded: 1944 as Military Service Company
Employees: 4,000
Sales: $865.2 million (1995)
SICs: 7389 Business Services, Not Elsewhere Classified

Company Perspectives:

EBSCO's goal is to deliver useful products and services with results that enable improvement and growth. The main lesson learned from our past is to put the customer first. While EBSCO has many customers, it is very important that each be respected and served as if they were the first and only. Customers teach and sponsor the ingenuity EBSCO needs to develop better products and services. While EBSCO takes pride in its selling, satisfied customers serve as the company's most effective ambassadors. EBSCO employees work for EBSCO customers.

Company History:

EBSCO Industries, Inc. is a diverse and international conglomerate that built itself on magazine subscription services. Still the company's mainstay, EBSCO Subscription Services is the world's largest subscription management agency, serving clients through 30 regional offices on six continents. The parent company operates many media related companies, including EBSCO Graphics and EBSCO Media, two commercial printing companies, EBSCO Publishing, a distributor and publisher of electronic reference sources and databases for libraries and organizations, and EBSCO Curriculum Materials, a publisher of educational materials for elementary, secondary, and vocational schools. The company also manufactures such diverse products as fishing lures, carpeting, and pool tables, among others. Ranked second on the Birmingham Business Journal's list of 100 privately-held local companies, EBSCO's diverse offerings prompted the Journal to create a new category called "service sector" to try to encompass all that EBSCO offered. The company's broad base of operations stabilizes and strengthens its subscription services; Dun and Bradstreet gave EBSCO the highest financial strength rating in the serials information industry in 1996.

Selling Started It All

When Elton B. Stephens graduated from the University of Alabama School of Law in 1936, he figured he could earn ten times the salary of a lawyer by selling magazines. Selling was not new to Stephens. Growing up in a poor family of eight children in rural Clio, Alabama, Stephens told Forbes he spent his youth selling "everything I could get my hands on." He had paid for college selling magazines door-to-door and selling socks and shirts in a dry goods shop. Though he was an enthusiastic salesman, Stephens told Forbes he hated selling magazines door-to-door. "You'd get the door slammed in your face. You'd get cussed at by husbands. You had to bounce back." Nevertheless, he went on selling and eventually hired others to sell for him. By 1937 Stephens purchased a Keystone Readers' Service franchise, which served subscribers for publishers of magazines.

During World War II, Stephens realized the great potential for success in selling to military bases, and by 1944 he and his wife, Alys Robinson Stephens, had invested $5,000 into their own partnership, the Military Service Company, which sold magazines, personalized binders, and racks. When Keystone fired Stephens for spending too much time with his own company, Stephens offered the publishers who had supplied Keystone better terms and took their business. And Stephens' treatment of Keystone became typical of his management style. If a supplier impeded the progress of a division, EBSCO would start its own venture or acquire another to replace it.

Stephens' desire to make his business as effective as possible and his youthful drive to "sell anything he could get his hands on," set the stage for EBSCO's growth. In an interview with Forbes, Stephens estimated that he launched between 60 to 80 companies over his 60 years in business, noting that 30 percent of them had failed. He recalled telling someone once "that I'd like to have five companies. That way, if one or two of them don't make it, I'll still have something to hang my hat on." By the 1990s, EBSCO was active in 28 industries.

Stephens started his company with the idea that he would work on an all-cash basis, and for 20 years he managed his company without a long-term loan. With cash on hand, Stephens formed Metal Fabricators and Finishers to manufacture display stands, Vulcan Binder and Cover to manufacturing binders, and Vulcan Enterprises to provide community related messages for binder covers; he purchased Hartsfield Printing Company to supply personalized stationary to the military; and he acquired Hanson-Bennett Magazine Agency of Chicago and National Magazine Company of San Francisco. But by 1964, Stephens had learned that loans help business grow and took on EBSCO's first long-term debt. Remembering a lost opportunity because of his reluctance to take on debt, Stephens told Forbes "Had I done that, I would probably be worth another three or four million dollars. But I'm not."

Nevertheless, since the 1960s, EBSCO--so-called after the initials of its founder's name along with the abbreviation for "company"--continued to grow, as did Stephens' fortune. In 1971, Stephens turned over EBSCO's presidential duties to his son, J. T. Stephens. Under the leadership of J. T. Stephens, EBSCO flourished. One year after taking the presidential position, J. T. Stephens saw EBSCO's sales volume double with the purchase of Franklin Square Agency, Ziff-Davis' international subscription service. And like his father, J. T. Stephens seems to be comfortable selling just about anything.

While the company remained focused on maintaining the prominence and leadership of its magazine subscription division, it broadened its base of operations to include unrelated industries such as National Billiard, Fine Craft Carpets, and PRADCO, the country's largest manufacturer of fishing lures. Elton B. Stephens remained as chairman of EBSCO, overseeing the company's charitable contributions and profit sharing investment trust. And in 1981, he started his second career as a banker, launching Alabama Bancorp.

Information Leaders

To maintain its leadership in the magazine subscription services industry, EBSCO is sensitive in its role as an information handler. EBSCO researches the needs of each of the different types of libraries it services: academic/research, law, biomedical, school, public, and special/corporate. Staff members organize seminars and forums to create a mutually beneficial working relationship with customers, seek electronic connections between EBSCO and automated library systems, and develop special reports that aid libraries in analyzing their journal collections. EBSCO employees also help develop library communication standards and support the library profession through membership and active participation in many library associations including the American Library Association, Medical Library Association, Special Libraries Association, National Information Standards Organization, Serial Industry Systems Advisory Committee, and the International Committee on Electronic Data Interchange for Serials. EBSCO strives to make subscription management as easy and efficient as possible. To that end it developed the world's first online data communications network for serial management. Developed in the late 1970s to connect all EBSCO Subscription Services regional offices with the central computer in Birmingham, in the 1990s EBSCONET acts as a link between EBSCO and customers worldwide. Customers can place orders and claims, order missing issues, search EBSCO's title database, send e-mail to EBSCO or other EBSCONET users, review their list of subscriptions ordered through EBSCO, access the Internet, and search for and order individual articles through the CASIAS (Current Awareness Service/Individual Article Service) option.

EBSCO's understanding of the importance of accessing information quickly and easily has helped it become one of America's leading producers of CD-ROM reference products. In the 1980s, EBSCO Publishing emerged from the combination of Popular Magazine Review, a publisher with abstracting and indexing capabilities which EBSCO renamed Magazine Article Summaries in 1987, and Horizon Information Systems, a producer of CD-ROM search and retrieval software. The first product of EBSCO publishing was The Serial Directory: An International Reference Book. The archives of Magazine Articles Summaries was converted to electronic format and published on CD-ROM in 1989.

EBSCO Publishing was the first to provide abstracts and keyword searching to full text or general magazines in electronic format. And in 1993, Carol Tenopir and Péter Jacsó noted in a study for Online that given a choice between indexes with or without abstracts they thought most users would choose those with abstracts "every time." The leading CD-ROM indexes for the layperson in 1993 were H.W. Wilson Company's Readers' Guide Abstracts, UMI's Periodical Abstracts Ondisc (and its subfile, Resource-One), and EBSCO's Magazine Article Summaries. Tenopir and Jascó attempted to differentiate between these competitors based on the quality of their abstracts. The authors looked at the consistency of style and readability in the abstracts, the extent to which the ANSI standard (The American National Standards Institute's standards for abstracts developed in 1979) was observed, and the informativeness of the abstracts. Readers' Guide Abstracts best met the test for informativeness and were two-and-a-half times longer than the others. The Magazine Article Summaries abstracts were very brief, but described the information in the article. The authors noted that EBSCO did not claim to offer full abstracts but rather summaries of articles.

Such a test may not indicate the desires of those who use indexes, however, and that is the market EBSCO desires most to please. Tenopir and Jascó wrote that some instructors and librarians preferred "an index with shorter, less informative abstracts because they didn't want students to rely on abstracts without having to go to the original article." Indeed, EBSCO's customers are the center of product development. Joseph Tragert, EBSCO Publishing's manager of product development, remarked in Information Today that "our objectives for 1996 are a direct result of focus groups, surveys, communication with industry professionals, and feedback from our customers and our sales team regarding the needs of libraries." In describing the product development cycle at EBSCO Melissa Kummerer noted in CD-ROM Professional that "we can never consider a product to be finished. We can always make it better: by adding features, adding editorial content, or reducing memory requirements. We believe that quality is not a static term." In 1996 EBSCO planned to increase the number of titles abstracted and indexed to over 3,800 and full-text titles covered to over 1,500.

In keeping with EBSCO's interest in developing new products, it began offering an online search and retrieval system called EBSCOhost in 1996. EBSCOhost featured the same searching capabilities made popular by CD-ROM but could be accessed on the Internet. Jascó hailed the emergence of EBSCO online because, he said, "for many magazines, EBSCO is the only abstracting/indexing and/or full-text source."

EBSCO's growth has strengthened the company and its surrounding community. Elton B. Stephens founded the Alabama "%" Club, whose member companies donates two, five, or ten percent of their pre-tax income to foundations or other charitable projects. EBSCO is a member at the five percent level. In addition, EBSCO funded the nation's largest endowment for a chair of library science at the University of Alabama. Of the company's success, Elton B. Stephens told Forbes, "I never dreamed that we would accomplish anything like what we have."

Principal Subsidiaries: EBSCO CASIAS, Inc.; Valley Joist, Inc.; EBSCO Investment Services, Inc.; EBSCO International, Inc.; EBSCO Worldwide, Inc.

Principal Divisions: Military Service Company; Vulcan Service-Periodical Sales; EBSCO Subscription Services; EBSCO Advertising Specialties; EBSCO Curriculum Materials; EBSCO Telemarketing Service; EBSCO Reception Room Subscription Services; EBSCO Furniture Pavilion; Publisher Promotion and Fulfillment; Directional Advertising Services; EBSCO Publishing; EBSCO Interiors; NSC International; National Billiard Company; Vulcan Binder and Cover; Vulcan Industries; EBSCO Media; EBSCO Graphics; EBSCO Carpet Mills; Four Seasons Garment Company; H. Wilson Company; Plastics Research and Development Corp. (PRADCO).

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