Rising Canadian tech stock to buy

The MoneyLetter recently profiled rising Canadian technology stock Kinaxis Inc. and its flagship supply chain management software RapidResponse.

Complexity and volatility are givens when it comes to discussing supply chain management. In fact, the two words may understate the reality.

Most companies have a need to streamline and manage their supply chain, and one solution provider that’s making a lot of noise by reducing complexity and volatility is Kanata, Ontario-based Kinaxis Inc. (TSX—KXS).

With a firm consensus rating of ‘Buy’ and a 12-month target price of $97, (with 2 analysts noting that a price of $115 is possible) Kinaxis appears to be a rising star in Canada’s reviving tech sector.

There’s no question Kinaxis has come a long way since its IPO (Initial Public Offering) in June 2014 at $13 a share. In 2015, it gained 154 per cent, 33 per cent in 2016, 23 per cent in 2017, and it’s up 26 per cent year to date through January 1, 2019.

Managing the complexity of a supply chain

Its flagship software RapidResponse provides Kinaxis with what some analysts believe is a wide economic moat, or a serious competitive advantage. It enables a company to consolidate its data as opposed to having to view and collect the data from numerous sources. RapidResponse also allows a user to model a supply chain from end to end at any point in time and to reveal glitches in the chain.

Finally, it provides an archive of qualitative data that surrounds a decision. This last advantage is one feature of Kinaxis’s ‘automated intelligence’, a term it prefers over artificial intelligence. Its ability to use AI to rank the data is a major reason that many analysts are behind the company.

Kinaxis demonstrated why it is a best-in-class leader a month ago when it announced that it is enhancing the power of what it refers to as concurrent planning with new data visualization and analysis capabilities. More than ever before, everyone in the supply chain, from executives to planners, will be able to solve complex planning problems.

Says the company in a news release, “Even in environments with increasing volatility due to regulation changes, SKU (Stock Keeping Unit) proliferation and growing consumer expectations, executives and planners know they have the right information to make the best decisions to maximize business performance.”

View supply chain from multiple devices

Other Kinaxis innovations that allow executives and planners to make decisions easily include:

■ Gaining instant visibility into their supply chain’s health anywhere from any device with the new mobile-first application, Live Lens;

■ Identifying supply chain hotspots and seeing, understanding and acting quickly when changes to parts, processes or suppliers impact bills of material (BOMs) with new easy-to-grasp BOM and network visualizations; and

■ Discovering insights and uncovering issues with the flexibility to explore data with new personalized reporting and visualization tools.

See how decisions affect your supply chain

“Successfully managing your supply chain requires making countless decisions daily, but the reality for most people is that the choices they are making are based on outdated and incomplete information, and without the necessary understanding of how their choices might negatively impact other parts of the business,” said John Sicard, CEO of Kinaxis.

“Our recent innovations provide instant end-to-end visibility of how decisions affect your supply chain and the people who run them. Gone are the days of working with fog between each supply chain function, and gone are the days of guessing the right course of action. Confidence is restored when everyone is aligned, everyone is working from the same truth and no one works alone.”

These new capabilities, underpinned by the unique Kinaxis concurrent planning technique, help customers further collapse the time it takes to make decisions. Concurrent planning instantly and continuously balances all aspects of the end-to-end supply chain, so when a planner in one area makes a change, everyone else across the supply chain immediately sees the impact.

Measure your role in the corporate process

“One of the biggest hurdles customers face is closing the gap between supply chain planning and execution,” said Seth Lippincott, Director of Research, Nucleus Research. “With these new and enhanced capabilities, Kinaxis is taking the right steps to connect every person along the supply chain network ensuring that they have access to the same, up-to-date data that can be used to make more insightful business decisions.”

Designed with on-the-go team members in mind, Live Lens lets anyone, anywhere, from any device see the most critical areas of the supply chain and get an at-a-glance view into how the company is measuring up against key corporate metrics related to their roles, like revenue and gross margin.

“Kinaxis has fundamentally changed how we plan,” said Lizet Tymon, Director of Advanced Planning, at technology company Jabil Inc. “We’re now able to manage and understand huge amounts of data and complexity easily. As a result, we’ve transformed our sales and operations planning (S&OP) processes to effectively collaborate with customers, evaluate financial trade-offs and make confident business decisions.”

Respond quickly to changes and substitutions

With new BOM and network visualization capabilities, users can identify supply chain hotspots and see, understand and act quickly when changes to parts, processes or suppliers arise. Planners can instantly recognize potential substitution options, the co-products and by-products that are involved, and detailed material requirements for improved planning, costing and overall supply chain performance.

New personalized reports and dashboards provide an intuitive and responsive view of data allowing users to discover insights and uncover issues and opportunities. Through drag and drop capabilities, users can reshape their planning experience for ease of use and greater productivity.

“Inventory analysis can be challenging, but with Kinaxis I now actually really enjoy it,” said John Leo, Inventory Analyst at Teradyne, Inc. “With so many ways to look at the data and make my decision, Kinaxis makes our entire analysis process easier, helps me in my day-to-day role, and lets me give complete, accurate results to management quickly. I couldn’t imagine not using Kinaxis.”

Life sciences largest industry user segment

Kinaxis supplies companies in the following industries: aerospace and defence, automobile, high-tech and electronics, consumer products, and life sciences. At a recent conference, the company detailed how life sciences has become Kinaxis’s largest industry segment as a percentage of revenue. The revelation comes as a result of Kinaxis building out industry-specific functionality to address the needs of its customers.

Multiple life sciences customers took the stage to discuss how they had worked with Kinaxis to build capabilities like inventory expiry planning and attribute-based planning. Kinaxis’ industry-specific capabilities aren’t limited to life sciences, with semiconductor companies articulating how they had worked with Kinaxis to develop customer-based sourcing path restrictions.

The focus on industry verticals is helping Kinaxis capture market share and deliver additional value to customers. Last year, auto behemoth Toyota chose the Kinaxis platform to manage its supply chain.

This is an edited version of an article that was originally published for subscribers in the March 2019/First Report of The MoneyLetter. You can profit from the award-winning advice subscribers receive regularly in The MoneyLetter.

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