Software Switch Backfires at Liqui Moly
Computers allow humans to automate some tasks, often performing them more accurately and orders of magnitude more quickly. That’s the reason businesses the world over have adopted various types of software the past few decades.
But things don’t always work out as planned, as attested recently by German lubricant and aftermarket additive manufacturer Liqui Moly, which reported that software implemented to simplify processes and reduce costs instead took a negative on half-year results.
“Automotive lubricants and automotive aftermarket additives is our core market,” Liqui-Moly spokesman Peter Szarafinski told Lube Report. “Rest assured that these products groups are definitely affected by the software problems.”
The company reported that net sales fell by 0.8 percent to €259.6 million (U.S. $291 million), “and this is only because the high backlog of orders cannot be fully processed due to the computer problems.”
According to its July 10 news release, the new software manages purchases, controls production, handles shipping and issues invoices. “The previous software had been in use for decades and was increasingly reaching its limits,” Liqui Moly stated. “So after years of preparation, it was replaced at the turn of the year.” Earnings for the half-year dropped by around 30 percent to €11 million. “I never would have thought that in 2019 a change of software could send a whole company skidding off the road,” CEO Ernst Prost said in the news release.
The company said the new software resulted in major difficulties that had a direct impact on business operations. “Despite the support of a well-known software company, we have still not succeeded in getting our production and delivery levels back to where we and our customers expect them to be,” Prost said. The company did not disclose the name of the software company or its software.
Liqui-Moly claims it is also incurring considerable extra costs because of the glitch. For example, containers can only be half filled, delivery vehicles have to waiter longer than planned to be loaded, and the company sometimes needs to use air freight when urgently needed items cannot be delivered in time by ship. “It’s not our customers’ fault that we are having problems, so we are doing everything we can to minimize the impact on them and to bear any additional costs,” Prost said.
He emphasized the company will not make any short-sighted decisions such as eliminating jobs or reducing operating hours. “We will stay on track, we will continue with our expansion strategy, we will employ new people, we will invest in new products and new markets,” he said.
The company stated it would not change its strategy or implement austerity measures. “The current issues have highlighted areas where we can invest to improve even further,” Prost said. The news release cited building a new central warehouse to simplify logistics, as an example.
“I hope that together with the software company, we will have resolved all the computer problems by the end of the year at the latest,” he said.