Liqui Moly: Software change - GF rages

Liqui Moly: Software change - GF rages

The introduction of new business software in January is becoming a permanent construction site for Liqui Moly. What was supposed to simplify processes and reduce costs at the oil and additives specialist does the exact opposite and spoils the half-year balance sheet. “If we were listed on the stock exchange, I would have to issue a profit reduction warning,” says managing director Ernst Prost. The company software is used, among other things, to manage purchasing, control production, handle shipping and issue invoices. It is therefore of central importance for Liqui Moly. The previous software was decades old and was increasingly reaching its limits. Therefore, after years of preparation, she was replaced at the turn of the year. But instead of the expected, minor introduction problems, there were massive difficulties that continue to this day. Difficulties that have a direct impact on business operations. “Despite the support of renowned software houses, we are still unable to produce and deliver at the level that our customers expect from us,” says Ernst Prost.

This leads to frustration and anger for customers. "I have never had to apologize to my customers as often in my entire professional life as I have in the last six months. The performance we are currently delivering hurts me deeply," says Prost. And it leads to considerable additional costs, for example for containers that can only be half filled with goods, for shipping companies that have to wait longer than planned for loading, or for air freight if urgently needed goods no longer arrive on time by ship. “Our customers cannot help our problems, so we do everything we can to keep the impact on them as small as possible and cover the extra costs.” Of course, it doesn't stop at these expenses. “In addition to the enormous costs for the software change itself, new ones are added every day for troubleshooting and problem solving.”

All of this leaves a clear mark on the business figures. Compared to the first half of 2018, sales only fell slightly by 0.8 percent to 259.6 million euros, and that only because the high order backlog could not be fully processed due to computer problems. However, the half-yearly income fell by around 30 percent to 11 million euros. “I would never have thought that a software change in 2019 could throw an entire company into such a tailspin.” The company, based in Ulm, Germany, was spoiled for success for a long time: more sales and more profits year after year. The current situation hits the company unexpectedly. Thanks to the high level of performance, this only means a dent in profits and is far from a situation that threatens the company's existence. “We will not have blind actionism in the form of short-time work or job cuts,” says Ernst Prost. “We are staying the course, we are continuing to expand, we are continuing to hire new people, we are continuing to invest in new products and new markets.”

Conclusion: No change of strategy and no austerity measures. Quite the opposite: “The current problems have shown us areas where we will now invest in order to become even better,” says Prost. The construction of a new central warehouse is intended to simplify logistics. "The storm we are currently experiencing is much stronger than predicted. High waves are breaking on our ship, one or two sailors are getting wet and some passengers are feeling sick. But our ship is seaworthy and not in danger. This storm will soon pass. I hope that together with our software houses we will solve the computer problems by the end of the year at the latest."