Kinaxis stock price spikes 11% as Ottawa firm signs Toyota as a customer

Auto manufacturing

Ottawa-based Kinaxis will manage the supply and demand processes for the largest automobile manufacturer in the world.

Japanese auto giant Toyota Motor Corp. announced Tuesday it will replace its current manual solution with Kinaxis’ RapidResponse, a supply chain management cloud-based software, to better align its sales and production divisions.

News that Kinaxis (TSX:KXS) had landed the major customer sent shares of the firm soaring on Tuesday. Shares were up to nearly $85, an 11-per-cent increase, in midday trading.

It’s clear why investors are excited about the news. Toyota is currently the largest auto manufacturer and fifth largest company in the world, according to Fortune, with annual revenues of $255 billion in fiscal 2017.

In terms of manufacturing, the Japanese firm has produced roughly 10 million cars annually in recent years.

In a statement, the general manager of Toyota’s corporate IT division said Kinaxis’ solution will help the auto giant improve its production efficiency.

"We are looking forward to working with Kinaxis to optimize inventory and enable more flexible responses to customer demand. RapidResponse will help us unify sales and production and will become the foundation upon which we can continue to realize improvement in demand and supply planning," said Iwao Nakano.

Toyota is the latest automotive company to join the Kinaxis portfolio. The firm added Nissan last year, alongside existing customer Volvo.

Kinaxis CEO John Sicard, who was recently named EY’s Entrepreneur of the Year in its 2017 Ontario program, said in a statement that the firm is “excited to help drive breakthrough results for one of the world's most prestigious brands.”