In an era defined by global economic shifts, supply chain complexities, and ever-increasing uncertainty, companies must constantly adapt to survive and thrive. One company at the forefront of this transformative journey is Kinaxis, a Canadian supply chain solution provider co-founded by Duncan Klett in 1984. Kinaxis is listed on the Toronto Stock Exchange, with a market cap of nearly US$3 billion as of November 2023.
"We see there's a general opportunity in the marketplace here. And so I decided I should come here, meet with some of our customers and prospects, and learn more about their needs, and to learn how we can expand into the market in Taiwan and help some companies here hopefully do better and make themselves world-class supply chain companies," said Klett.
Kinaxis has been offering tools that empower businesses to navigate the intricate web of global supply chains over the past three decades. Recently, Duncan Klett visited Taiwan to explore new growth opportunities, with the aim of aiding businesses to build world-class supply chains. In an exclusive interview with DIGITIMES Asia, Duncan Klett shared insights into Kinaxis' journey, its unique value proposition, and the evolving landscape of supply chain management.
Transforming supply chain management
When asked about the genesis of Kinaxis, Klett offered a fascinating account of the company's history. Kinaxis was founded with the mission to revolutionize the Material Requirements Planning (MRP) process. At the time, MRP was a cumbersome, time-consuming operation that could take anywhere from 30 to 50 hours to complete. This limited its frequency and utility, making it challenging for businesses to rely on accurate data for their supply chain planning.
Duncan Klett's background in IC computer-aided design (CAD) paved the way for Kinaxis's innovative approach. Inspired by the significant improvements in design enabled by high-speed hardware, Klett aimed to accelerate MRP and provide real-time, actionable insights. Kinaxis set a lofty goal of completing the MRP process in just 5 minutes, which they successfully achieved. This breakthrough allowed supply chain planners to not only enhance the efficiency of their operations but also facilitate better decision-making and scenario analysis.
Key customers and global reach
Kinaxis has established itself as a trusted partner for a wide range of businesses, including major electronic contract manufacturers like Flex, Celestica, and Jabil, as well as electronic brand names such as Schneider Electric and Nikon. The company's global footprint extends to Japan, where over 40 companies rely on Kinaxis for their supply chain needs. Additionally, Kinaxis has a strong presence in the automotive industry, counting Honda and Ford Motor Company among its customers.
Geographically, the company's largest customer base is in North America, with a significant presence in Asia, Europe, and Japan. Their strategic focus on Asia, particularly Taiwan, reflects the region's burgeoning electronics industry and the need for advanced supply chain solutions.
Kinaxis serves a diverse array of industries, catering to their unique supply chain challenges. The company's client portfolio extends to pharmaceuticals, industrial equipment, machinery, and beverage companies, along with agricultural businesses requiring intricate demand forecasting. By facilitating comprehensive supply chain visibility and concurrent planning, Kinaxis helps these industries optimize their operations and reduce their environmental footprint.
Kinaxis's business model revolves around a Software as a Service (SaaS) approach, emphasizing a cloud-based subscription service. This model ensures that Kinaxis remains committed to continually adding value to its customers. Renewals are based on the company's ability to enhance and adapt its services, aligning its goals with those of its customers.
Competitive differentiators
In a market where supply chain management solutions are proliferating, Klett said Kinaxis stands out due to the tangible impact it delivers to its customers. The company's clients have reported significant cost savings and increased agility. By helping businesses respond swiftly to changes in supply and demand, Kinaxis ensures that they can maintain a competitive edge.
"Concurrent planning", a unique feature offered by Kinaxis, streamlines supply chain orchestration, enabling real-time adjustments and reducing planning lead times. It is also able to run multiple users, multiple scenarios, and additional functionality to model more complicated supply chains. This capability is particularly crucial for electronics manufacturing services (EMS) companies, which often navigate complex, global supply chains.
Kinaxis recently also extended the service on the ESG side, sustainability, providing carbon footprint information within the supply chain, and tracking suppliers' suppliers, to help customers make informed decisions and choices on sustainability.
"So now, you not only worry about lead time and price, you also need to take sustainability and carbon footprint into consideration, and so you can make a better decision and improve your business operations and reduce the impact on the planet," said Klett.
The global economic landscape remains uncertain, with predictions ranging from stagnant growth to slight contractions. However, this unpredictability creates a strong imperative for businesses to enhance their supply chain management capabilities. Kinaxis believes that competition in the supply chain industry will intensify, driving the need for advanced tools that can manage the complexities and disruptions effectively.
Expansion plans and collaborations
Kinaxis is expanding its team in Taiwan and aims to forge partnerships with local companies possessing specialized domain knowledge. The company views Taiwan as a hub for electronics manufacturing, offering substantial growth potential. Through these collaborations, Kinaxis plans to play the role of a platform and include sub-solutions that cater to specific market requirements.
Beyond Taiwan, Kinaxis is actively expanding its presence in Europe and the Asia-Pacific region. The company's goal is to help more businesses worldwide achieve world-class supply chain management by collaborating with partner companies that understand the unique challenges of their respective markets. Kinaxis also offers an Academic Program to provide supply chain knowledge and experiences into university classes.
