LogicSource: Revolutionizing Procurement with a Focus on Execution and Transparency
“Our clients understand that they have internal deficiencies in sourcing and procurement – it simply isn’t their core competency, and they don’t have the right people, processes and policies to manage that spend internally,” President and CEO David Pennino says. “They looked outside for help, but prior options were typically limited to expensive, advice-based consulting. When you are looking to reduce cost, you don’t want to start by writing a check, making the consulting model very frustrating. Additionally, consultants don’t always execute, leaving the customer to implement action based on the advice, often while lacking the capability. We built our company to get at those challenges.”
Different Approach
What makes LogicSource stand out is its focus on execution. The company is paid to implement solutions including everything from overseeing sourcing, procuring and trafficking to driving category capability and handling cost reduction initiatives. In addition, it has an investment-based business development model wherein it makes the upfront investment to analyze a client’s business and identify savings and value opportunities prior to entering an agreement. By investing its own time, resources and capital to demonstrate areas where it can help, it takes on the risk. Clients enter the relationship with a clear understanding of the return they will receive on their investment.
Its asset-based delivery model means once it finds ways to drive improvement for clients, it already has the people, processes and tools required to execute rapid solutions. Utilizing its shared service center expertise and OneMarket technology, the company can automate areas such as asset management, digital workflow and e-procurement, and it can provide analytics and business intelligence. Additionally, it brings significant spend leverage through its supplier network, ensuring clients benefit from best-in-market pricing.
“Our retail clients face challenges related to owning, controlling, finding and managing assets, and we put all of that into one system,” Pennino says.
Finally, through full transparency, LogicSource separates itself from many competitors in the procurement outsourcing sector. For the company, transparency means it doesn’t sit between clients and suppliers. Clients maintain a direct relationship with their suppliers, so they always know the financial details, including margin and costs, of each transaction.
“Our commitment to transparency provides an unprecedented level of trust in our client relationships and makes us unique,” Pennino says. “Also, we offer licensable technology and the full solicitation of our people. The burden is on us to add value every day so that we continue to provide those services.”
Expansion Plans
Looking forward, category expansion is a big imperative for LogicSource. When the company started, it focused mainly on physical marketing areas such as printed materials and catalogs. Now it covers indirect procurement in more areas, such as packaging, retail operations and facilities.
“That strategy to expand categories is fueling same account growth, helping clients see more improvements and helping us grow our vertical markets,” Pennino says. “We’ve upgraded OneMarket and our service centers to cover all of those categories.”
Supporting its growth efforts was the recent move to open the second shared service center in Texas. LogicSource chose Dallas because of its strong business and tax environment and access to transportation and workers.
Other ongoing initiatives include enhancement of OneMarket’s business intelligence capabilities to improve reporting. The company can now harness data in ways that can examine customer spend and show clients where their improvement opportunities can be found without disruption. Internal operating improvements include adding a time tracking platform to oversee employee performance to find ways to improve effectiveness and track its own costs.
Strong ongoing relationships with suppliers will be another important area for LogicSource. Many of its people have come from the supplier and manufacturer sectors, bringing their contacts with them. On top of that, because the company doesn’t separate suppliers from clients, suppliers tend to embrace its business model.
“We work hard to ensure a collaborative effort,” Pennino says. “We use a number of tools to monitor supplier relationships, and we create agreements between all parties.”
Having just completed a multi-year strategic plan, LogicSource feels like it is well positioned in a hot space with the right offering and receiving positive reaction from customers. More competition is entering the market, so the company needs to help clients sift through the noise.
As its operating platform grows, the company must continuously innovate to keep a high level of customer satisfaction. For example, LogicSource recently outsourced recruitment as a more effective way to find qualified candidates and prospective hires.
Focusing on its strengths, LogicSource has zeroed in on several market segments. One is large organizations where it can get involved with high investment projects up front and expand into additional categories over time. The other is the small to mid-size business with a decent amount of indirect spend and no sourcing capability. Going forward, the company will focus its solutions in those areas.
“In the context of retail, the systems, people, processes and spend associated with physical space – what goes in, on and around the store – this is an area where retailers are missing resources and focus,” Pennino says. “We have the model, the tools and the expertise to make an impact for our clients.”