Core Strength: How LogicSource is Building Better Profit Margins Through Software, Data, and Insights
This article and podcast were originally published on mission.org.
Companies are built off profitability. The investments you make are designed to support the products or services you sell. But let’s be honest for a moment, you like buying the things that are core to your business because that’s what you care about. The secondary expenses that occur are less fun. Whether you’re dealing in electronics, retail, mortgages, or hamburgers, inevitably there are expenses that arise that don’t support your product. So how do you cut down on those expenses? And how can all the data gathered from shipping and receiving actually improve your profit margins?
“What’s not core to you is core to us. What I mean by core to your businesses is at Harley Davidson, they make motorcycles. They source and buy steel, bolts, oil, leather, so on and so forth. But what they also need to operate their business is they need marketing. They need packaging, they need stores to sell their motorcycles in. Their retail operation. They need to ship things. It’s everything else.”
Craig Garno is the CTO at LogicSource and he’s helping companies such as LuluLemon, BIG Lots, and Rite Aid cut down and streamline their spending. On this episode of IT Visionaries, Craig explains why companies that fail to focus on indirect services will struggle to scale the business while also paying more than fair market value. Plus he dives into how LogicSource is helping these businesses trim the fat on those investments, and the role data management plays in its efforts. Enjoy this episode.
LogicSource deals in the area of indirect procurement services, which can be anything from the logistics of the supply chain, to marketing services, to packaging of an item. Garno mentioned businesses have a tendency to only invest in those core elements of the business, which means the technology, or the data needed to operate indirect services effectively is often left behind.
“What we find in our clients, there’s a lack of data because a lot of indirect work is done manually,” Garno said. “Where there’s technology, it perhaps wasn’t implemented completely, or it was shelved. What you get out of that is you get supplier fragmentation, you get road buying, you get non-compliance of price. Those disciplines that may be on the direct side just aren’t there on the indirect side.”
Because gathering enough data is key, Garno said his team spends most of their time just learning the ins and outs of each company. What they need, what services they buy, and then they streamline that process by developing tools and services around that company’s needs. But when you’re dealing with any company’s data, especially sensitive data, the process is a difficult one.
“Anytime you start with a new client relationship, where they’re going to be sharing data, the first thing you’re going to do is meet with their security team,” Garno said. “You’d meet with a group of people to make sure you’re putting the controls in place, proving to your clients that you can take care of their data and then backing it up with audits through third party pen tests, vulnerability assessments on our applications. It’s all about making sure that you’re taking care of your clients, their data and keeping everything whole.”
For Garno, who is LogicSource’s first CTO, the role requires him to work on functions that are not core to other businesses, but the software the company uses actually includes many elements that he architected and designed in the past with other companies.
“I’ve always been a product development guy,” he said. “I love building software. I love building applications — it’s what excites me to this day. As a services organization, we bought and merged into the organization at inception procurement technology that myself and a team of people that architected in a prior life. So we merged that business into this business.”
To hear more from Garno and the work LogicSource is doing in the indirect procurement space, check out the full episode of IT Visionaries!
LogicSource is purpose-built to drive profit improvement for its clients through better buying. LogicSource focuses exclusively on the sourcing and procurement of goods and services not-for-resale, which typically represents 20% of a company’s revenue and the area of greatest spending inefficiency. Tested time and again in the marketplace, LogicSource’s proven engagement model builds profitable partnerships that achieve 4-15x ROI.