Lidl Suffers €500 Million Supply Chain Failure
Grocery chain Lidl and software giant SAP planned a new inventory management system in 2011. Now, after seven years and an estimated €500 million investment, Lidl’s new system with SAP is dead on arrival.
About a thousand staff and hundreds of consultants implemented the new company-wide system for inventory control known as eLWIS (pronounced like Elvis in German), reports Handelsblatt Global. In April 2017, SAP awarded Lidl a prize for being one of their best customers. But by May 2017, Lidl’s head of IT, Alexander Sonnenmoser, had left, and in July this year, eLWIS was pronounced dead on arrival, says the report.
“We are practically starting from scratch,” a company insider told Handelsblatt.
Changing the software necessitated reassessing almost every process at the company, insiders say in the report. Lidl bases its inventory management system on purchase prices. The standard SAP for Retail software uses retail prices. Lidl didn’t want to change, so the software had to be adapted. Many more accommodations had to be made, and the more changes there were to the code, the more complex and more susceptible to failure the Lidl software became, continues the report. Performance fell, costs rose.
“The strategic goals as originally defined were not possible at an acceptable expense,” Lidl boss Jesper Hoyer wrote in letter to staff.
An SAP spokesperson told RIS, "LIDL and SAP have successfully worked together for many years and plan to continue doing so. While LIDL is discontinuing the current project, this does not in any way affect our close relationship and cooperation in other areas."
One of Lidl’s biggest challenges now will be retaining all the IT experts it hired, according to the report.
For the full article, “Lidl software disaster another example of Germany’s digital failure,” click here.