The CPG Procurement Playbook: How to Turn Your Supplier Relationships Into a Competitive Advantage
Most CPG founders treat procurement as a cost center. The best ones turn it into a strategic weapon. Jeff Church's framework for supplier relationships that protect margin.
There was a period at Suja when I'd lie awake at night thinking about one thing.
Not Costco. Not Coca-Cola. Not our cap table.
Produce.
We were processing more than 1.5 million pounds of fruits and vegetables every week at our peak. Almost all of it harvested less than twenty-four hours earlier. Organic. Cold-pressed. Every bottle we shipped depended on a supply chain we didn't fully control... and for a long time, I didn't fully understand how dangerous that was.
One drought. One supplier who couldn't scale fast enough. One logistics breakdown in the organic farming ecosystem. And the fastest-growing CPG brand in America grinds to a halt at exactly the wrong moment.
That's the procurement problem nobody talks about. Most founders treat sourcing like an administrative function. Pay the invoice. Reorder when you're running low. Hope the price doesn't move too much. And then one Tuesday morning the phone rings and your key ingredient supplier needs to "adjust pricing" by 30% — and you're staring at a P&L where 30% suddenly means your gross margin is gone.
I've had that call. I've had it more than once across eight companies. What I learned is that procurement isn't a cost center. It's a strategic weapon. And the founders who understand that build businesses that are fundamentally harder to disrupt than the ones who don't.
The Supplier Relationship Spectrum
Not all supplier relationships are created equal. Most founders are stuck at the transactional end of the spectrum without realizing it.
Here's how I think about it:
Transactional. You're a buyer, they're a seller. You compare prices, place orders, and the relationship starts and ends there. Convenient when you're tiny. Dangerous when you're not. A transactional supplier has zero loyalty to you. The moment a bigger brand needs their capacity, you're second in line.
Preferred Partner. You've earned a seat at the table through consistent volumes, reliable forecasting, and on-time payment. They know your business rhythm. You know their constraints. Pricing is better because you've reduced their cost to serve you — less back-and-forth, more predictability on both sides.
Strategic Alliance. This is where procurement becomes a moat. You're co-developing formulations. You're doing joint business planning. You might have a right of first refusal on capacity or a new ingredient. They've invested in understanding your brand mission and you've invested in understanding their operation. Neither of you benefits from breaking this apart.
The goal isn't to turn every supplier into a strategic ally. You can't — and you shouldn't try to. But your top three to five ingredients, the ones that make up the backbone of your COGS? Those need to be in the preferred partner or strategic alliance category before you're at meaningful scale. Not after.
Five Levers Most Founders Never Pull
1. Run a supplier concentration audit.
Go look at your ingredient spend right now and ask: if one of my top three suppliers couldn't deliver next quarter, could I replace them in 30 days without killing my production schedule?
If the answer is no, you've got a concentration problem. No single supplier should represent more than 40% of any critical ingredient. That number is a ceiling, not a target. The moment a supplier knows they're irreplaceable, the dynamic of every conversation you have with them changes. Not always in bad ways — but in ways that shift power away from you.
2. Use volume commitments as leverage, even when you're small.
Here's something founders don't realize early enough: suppliers don't just care about what you're buying today. They care about what you're planning to buy. A 12-month rolling forecast, even an imperfect one, is worth more to a supplier than a 10% larger spot order.
When you commit to a forecast — in writing, with payment terms that signal you're serious — you give the supplier something they can plan around. That's valuable to them. And valuable things get priced accordingly. In my experience, credible forward commitments can move pricing 8-15% off where it started, often without a single adversarial conversation.
3. Co-develop where it matters.
The most durable supplier relationships I've built involve shared intellectual investment. When you and a supplier spend six months co-developing a formulation — tweaking yield, optimizing a cold-press parameter, building a process around your mission — you've created switching costs on both sides. They can't easily take that formulation to a competitor, and you can't easily replicate what they've learned about your product.
This isn't just a cost play. It's a defensibility play. If your ingredient or process is even partially proprietary, the "commodity thinking" that erodes margins everywhere else doesn't apply in the same way here.
4. Trade volume certainty for price certainty.
Long-term supply agreements get a bad reputation because founders sign them without thinking clearly about the downside. And look, I've made mistakes with long-term commitments that came back to haunt me. But the underlying logic is sound: if you're willing to commit volume over 24 or 36 months, most suppliers will lock in pricing or at least cap escalation.
In a business where raw material volatility can swing your gross margin by 5-8 points in a bad year, a fixed-price supply agreement is worth real money. Model it out. What would you pay to remove commodity price uncertainty from your COGS for 18 months? That answer tells you how much room you have to negotiate with a supplier.
5. Know when backward integration is the answer.
The most aggressive version of this is what Suja eventually did with Greg Peyser and Russell Jack at Jack Family Farms. They shared the mission of making organic produce more accessible. The relationship started as a strategic supply partnership... and eventually they became part of Suja. We simplified the supply chain, lowered costs, improved confidence in quality and availability, and strengthened the mission story at the same time.
Backward integration isn't right for most early-stage brands. But it's worth understanding the logic: when a supplier relationship is so critical that you can't grow without it, and when the supplier shares enough of your mission that the cultural fit exists, acquisition starts to look less like an operational decision and more like a strategic inevitability.
The Number That Connects All of This
When I started at Suja, our gross margins were hovering around 28%. I've said it before and I'll keep saying it: that number is survivable when you're small. It is not survivable when you're trying to scale.
By the time I left, gross margins had climbed to nearly 50%.
That wasn't magic. It was a combination of volume (fixed costs spread across more units), product mix decisions, and procurement discipline. The manufacturing costs per unit fell. The supplier pricing got better. The formulations got tighter. Every point of improvement in COGS rolled directly to the bottom line and to our attractiveness to strategic buyers.
"Gross margin determines destiny." I believe that. And procurement is one of the two or three places where you actually get to defend it.
What This Looks Like in Practice
If you're building right now, here's where to start:
Map your ingredient spend by supplier and flag anything where a single source represents more than a third of a critical item. Then go have a conversation with that supplier — not about the problem, but about the relationship. Where are they investing? What does their capacity look like in two years? What does their ideal customer look like?
That conversation tells you more than any RFP. And it positions you as a partner instead of a buyer.
From there, build your supplier tiering. Strategic allies at the top, preferred partners in the middle, transactional at the edges. Know which category each one is in, and have a deliberate plan for how you want to move the important ones up.
CPG is a "Penny Profit" business. The pennies matter. And nowhere do those pennies show up faster than in how well you've managed the relationships on the other side of your ingredient spend.
If you're building a CPG brand and want frameworks like this delivered directly — along with operator-level strategy, financial models, and 1-on-1 access to people who've been through it — start with The CPG MBA. And if you want 90 days of structured momentum, the 90-Day Breakthrough is designed for exactly where you are right now.
Want more insights like this?
Get Jeff’s take on what’s actually working in CPG. Direct to your inbox.