The introduction of new company software has plagued LIQUI MOLY with problems since it launched in January, according to the company. The system that was supposed to simplify processes and reduce costs for the oil and additive specialist, has had precisely the opposite effect and negatively affected the half-year results.
“If we were listed on the stock exchange, I would have to issue a profit warning,” said Ernst Prost, CEO of LIQUI MOLY.
The company software manages purchases, controls production, handles shipping and issues invoices, among other tasks. The previous software had been in use for decades and was increasingly reaching its limits. After years of preparation, the old software was replaced at the turn of the year.
But instead of the anticipated minor teething issues, there were major difficulties that are still ongoing, according to the company. The difficulties have 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.
Customers are becoming frustrated and angry, according to LIQUI MOLY.
“In my entire professional career, I have not had to apologize so often to customers, as I have had to in the last six months,” Prost said. “The level of service that we are currently delivering really pains me.”
LIQUI MOLY is also incurring a considerable amount of extra costs because containers can only be half filled, delivery vehicles have to wait longer than planned to be loaded, and air freight is being more frequently utilized for orders normally shipped on a boat.
“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. “In addition to the huge cost of having the software installed, every day produces new things to troubleshoot and problems to solve.”
All of this has left significant tracks in the company’s financial figures, according to LIQUI MOLY. Compared to the first half of 2018, turnover has fallen slightly by 0.8 percent due to a high backlog of orders that cannot be fully processed because of the computer problems. Earnings for the half-year have also fallen approximately 30 percent.
“I never would have thought that in 2019 a change of software could send a whole company skidding off the road,” Prost said.
LIQUI MOLY does not plan to alter its current business strategy or to implement austerity measures.
“The current issues have highlighted areas where we can invest to improve even further,” Prost said.
Building a new central warehouse, for example, would simplify logistics.
“The storm that we are currently going through is a lot stronger than predicted. Big waves are breaking over our ship, some of the crew are getting wet and some of the passengers are a bit nauseous. But our ship is seaworthy and not at risk. And the storm will soon be over,” Prost added. “I hope that, together with our software company, we will have resolved all the computer problems by the end of the year at the latest.”