Forbes Q&A: Helping Pandemic-Battered Businesses Stay Afloat
David Pennino is president, CEO and founding partner of LogicSource, the indirect procurement company helping pandemic-battered businesses find profit opportunities and streamline supply chains. David and his team are on a mission to help clients navigate today’s challenging business climate and, in the meantime, elevate the brand of procurement. A Norwalk, Connecticut native, David takes great pride in creating jobs in his hometown, hiring a talented and diverse workforce and creating a workplace where employees thrive.
I had the opportunity to interview David recently. Here are some of the highlights of that interview:
Jill Griffin: Can you tell us a bit about your background and expertise? What inspired you to start LogicSource?
David Pennino: I grew up in Norwalk, Connecticut, where LogicSource is headquartered. In fact, when I was a kid, I used to run around in the abandoned warehouse and factory that are now our offices. It’s neat to put jobs back into my hometown. Professionally, I started my career at Gartner, where I learned a lot about the IT function. I was fascinated by the journey that the chief information officer took and thought, “What else in the enterprise needs rebranding and rebooting?” The procurement function stuck out to me. I wanted to build a company focused on buying things, and that’s what I set out to do with LogicSource.
Griffin: How do you collaborate with clients to deliver your technology and services?
Pennino: The way we deliver indirect procurement services to our clients is quite flexible. We like to call it: “for you or with you.” For example, we partner with the very capable, very talented teams from clients Western Union and Lululemon to drive sourcing and procurement efficiency and help them buy better. On the other hand, we are the procurement department for clients like Big Lots! and Fresh Market.
Griffin: How has the sourcing and procurement landscape evolved since the beginning of the pandemic? What are the unique challenges organizations have faced and are facing today?
Pennino: People generally thought of procurement as the function that slows them down and ties up processes with red tape, contracts and legalese. And businesses didn’t view procurement teams as strategic. But the pandemic has changed that perception. Procurement has had a chance to show its value in dealing with the supply chain crisis and quickly finding critical goods like masks, hand sanitizer and glass screens for registers. And profits have been challenged, so companies have had to find profitability elsewhere in the enterprise. One retailer we work with estimated that the ramifications of the supply chain crisis will increase its cost by $100 million in 2022, and the business needs us to find $100 million elsewhere. So you can see how procurement has become a much more strategic function within organizations.
Griffin: How are your services and technology platform helping customers navigate this challenging time?
Pennino: Before the pandemic, we were primarily in the savings business. While companies could use their cost savings to provide more jobs, capabilities and products, actually keeping people safe is very rewarding. Think about our retail clients, like the Gap, with thousands of employees braving retail environments during a raging pandemic. If we couldn’t find trainloads and truckloads of PPE, hand sanitizers and fiberglass screens for registers, they couldn’t have stayed open — let alone stay safe. We have another client that deals in printing, but they couldn’t get paper. We were able to find them multiple rail cars of reasonably priced paper to keep them in business. Solving clients’ supply chain crises and keeping employees safe has really changed how we engage with our customers.
Griffin: You tout your strong team at LogicSource. How do you choose your team members?
Pennino: LogicSource is 43% women, and we have more than 50% female representation on our leadership team. My chief talent officer, chief financial officer, chief administrative officer and chief legal counsel are all powerful women. But we can do better, and we will do better because there still aren’t enough women in procurement. Beyond that, our team is interesting because we are in the execution business while the companies we compete with are in the advice business. We reduce costs by finding savings opportunities and then rolling up our sleeves and going after those opportunities. As a result, our employees are more experienced in real-life operations than the shiny-shoed consultants that say there are savings opportunities but don’t actually offer them.
Griffin: Do you have practical advice for businesses struggling to adapt and stay afloat?
Pennino: I’ve seen so many businesses cut costs by taking out their most precious asset: their people. They take out people first because it’s a fast fix. But I would go after the prices first and staff last. Businesses need to look at all the things they buy and figure out what they can live without or what you can pay less for, so they can stay open and keep their people employed. Using services like ours, businesses can drive these efficiencies through price negotiations with suppliers and apply substantial leverage to drive down costs.
Griffin: What’s next for LogicSource?
Pennino: We’re known for our professional services where we become the procurement department for clients or we do it with them. But over the past 12 years working with marquee brands, we developed our own procurement software, OneMarket, to do procurement work for clients. We started selling that software about a year ago, and it grew 208% year-over-year last year. Our software is a huge opportunity for companies that want to handle procurement themselves, especially as other technology on the market is antiquated and inefficient. Most of these technologies were built by kids who have never operated a day in their lives, but OneMarket software was built by practitioners who have been on factory floors and in operations. And our technology is easier to use, more effective and about a third of the price of the other stuff on the market. You’ll probably also see us get into the data business. We have about $52 billion of spending data running through our firm, and that figure grows at about $10 to $15 billion each year. There are some exciting things businesses can do with this procurement data. For example, we know marketing sentiment across industries and businesses, and we know what companies are spending money on and how much they’re spending. We also know why some suppliers win and why some lose. Was it price, service, quality?
Griffin: What is something I should have asked you, that I didn’t ask you?
Pennino: Some businesses are struggling mightily with how to handle COVID with their employee base. We’ve simply said, “Do what’s best for your family.” We have 210 highly trained workers — growing at 20 or 30 people per month — and our employees’ professionalism and awesome work ethic have blown me away. And we haven’t lost one minute of productivity. We’ve learned that we can be collaborative and effective while working from home, and we can have balance in our lives while still crushing it at work.
About the Author:
Jill Griffin brings three decades of leading-edge Customer Loyalty know-how to corporate Jill brings her customer loyalty expertise to corporations including Dell, Microsoft, Sprint, Hyatt Hotels, Toyota, Siemens, Subaru, Ford Motor Company, Western Union, Raytheon Aircraft and Hewlett Packard. Check out her Digital Loyalty blog here.
Her ground-breaking book, Customer Loyalty: How to Earn It, How to Keep It, is a wake-up call for B2B and B2C firms ready to ace customer profitability, staff retention and engagement.
Jill graduated Magna Cum Laude from the University of South Carolina, earning her Bachelor of Science and MBA degrees and is the recipient of the Moore School’s Distinguished Alumni award.
Jill also mentors women for corporate board service. She is author of Earn Your Seat on a Corporate Board and Women Make Great Leaders. She is She is immediate past Vice Chair (and Independent Board Director) for publicly-traded Luby’s/Fuddruckers Restaurants LLC.