A "bottom-lime" could be an expense not in the budget or an
unexpected cancelled order. In fact it could be anything that
could not have been forecast that reduces the number on
the bottom line of a profit and loss statement.
Unlike its fruity namesake, it seems bottom-limes are
always in season.
The main source of bottom-limes is a failure to measure the
right indicators. Too many business leaders will measure
things that simply do not make sense. For example,
measuring the effectiveness of a marketing campaign by
the number of web hits being received is incorrect. The
correct measurement is how many of those hits are being
transformed into sales. Although web hits individually may
be valuable, without a way to measure where the prospect is
falling out or to know which pages the prospect is looking
the web hits are worthless.
At Kmart management began measuring on-time shipments
from their suppliers. The goal of getting suppliers to deliver
faster was quickly achieved. However, without first
developing a strategy to reduce safety-stock (extra inventory
maintained to make up for forecast errors) inventory levels
to offset the earlier receipts, inventories swelled.
This safety stock reduction strategy never was
implemented, increasing the inventory carrying cost and
making the original well-intentioned quicker shipment goal a
Use this term for developing skills in these areas:
A Bizerm™ is a new business term combining two
descriptive words into a single word or phrase whose
definition is often only known by those using it. To
see more terminology in the workplace, click here.
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