“In this economy, the key entry point is saving money, and then proving how you can make that savings sustainable,” Pennino says. “Our entrepreneurial approach to customer acquisition allows us to get a deep understanding of our clients’ business, on our nickel, to show them how we will drive sustainable and measurable savings.
“What we’re doing for free is to prove our value up-front,” he adds. “It’s a great way to get into a company because we show them that we know how to deliver results. And we are only paid off results.”
Founded in 2009, LogicSource focuses on the procurement of printed materials, packaging, fixtures and in-store operational items. It services clients in a variety of industries, including retail, financial services, pharmaceuticals and insurance. Although just a few years old, the company’s leadership and assets date back more than 10 years, with executives who have handled some of the largest deals in the industry, the company says.
The company offers a suite of services that helps clients reduce costs in the categories they address. These services include business process management and technology to maximize savings and consulting to review current operations.
“We share our results in a fully transparent manner to show exactly how we save money and improve process,” Pennino says. “And we only get paid when you say, ‘You’ve saved us money.’ Customers could take our results and not do business with us, but that just doesn’t happen.”
In 2006, Pennino left Gartner, a leader in technology advisory and outsourcing, to enter the print procurement industry. LogicSource’s first client was Bain Capital, with whom it partnered to manage the procurement needs of some of the hundreds of companies the private equity firm managed.
Pennino wanted to establish the IBM of print procurement, comparing his firm to the industry-leading IT outsourcing firm, and Bain was its ticket into that arena. “We’re building a firm that brings technology advisory and outsourcing to the procurement process,” he says. “Although the truth is, we’re not really an outsourcer, we’re really more of a co-sourcing partner. No positions move offshore and, unlike outsourcers, we are more likely to add positions to drive more effective procurement and savings.”
In just the 37th month of operations, LogicSource has landed multiple clients within Bain Capital’s portfolio as well as numerous “open market” deals, which gave it $350 million of spend to oversee, a figure that is growing at $150 million per year, according to the company. Today, LogicSource has offices in Dallas; Raleigh, N.C.; Philadelphia; Milwaukee; Boston; and San Francisco, in addition to its headquarters in South Norwalk, Conn.
“What we do for a living is analogous to a big-box retailer,” Pennino says. “We’re building a wholesale buying club, like a BJ’s, Costco or a Sam’s Club, but for corporations. The amount of leverage we bring to a buying environment and resourcing and systems we bring to a buying environment far exceed what our customers can do. We’re able to drive savings through massively increased leverage.”
Finding the Personnel
When launching a services business like LogicSource, Pennino says one of the most challenging aspects of scaling up to meet demand is finding experienced potential employees. “It is a people-based business, and finding great people that are senior has been one of the harder things we do,” Pennino says. “We don’t go to the model that hires recent grads out of school so they can learn on our customers’ dime. Finding great people is always a challenge.”
To lure the best and the brightest, LogicSource has focused on creating a culture that its employees enjoy. According to Pennino, this means treating employees like family and facilitating this environment throughout its locations. It doesn’t hurt to offer a better compensation and benefits package than the competition, as well.
“Creating that kind of environment is key,” Pennino says. “In our business, you have to have the best environment to hire skilled people.”
When it comes time to hire, Pennino realizes he can’t be surrounded by individuals who won’t challenge him and his team. The LogicSource recruiting mantra simply is, “hire people that are as good or better than you in every position.”
“What I believe and have always believed is you have to hire people that are better than you,” Pennino explains. “Then we move the guardrails far out from our executives’ shoulders and we let them run the business.”
While Pennino and his fellow directors on the board encourage anyone to share ideas for the business, LogicSource makes sure those who pitch the idea execute it, as well. Pennino says the company is employee-owned, and employees receive compensation based on their personal success and key performance indicators.
“If you have a great idea, you’re going to own it,” Pennino says. “When employees are truly owners, they give birth to great ideas and then we can provide resources around them to execute.”