"Bottom Lime"
A “Bottom Lime” is anything that has a negative effect on profits. In other words, it turns the bottom-line sour. Unlike their 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 are 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 Troy-based 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 inventory levels to offset
the earlier receipts, inventories swelled.
Safety stock is extra inventory maintained to make up for forecast errors.
This safety stock reduction strategy never was implemented, increasing the inventory carrying cost and making the original well-
intentioned quicker shipment goal a bottom-lime.
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Return to the Business Terms? Home page.
A “Bottom Lime” is anything that has a negative effect on profits. In other words, it turns the bottom-line sour. Unlike their 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 are 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 Troy-based 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 inventory levels to offset
the earlier receipts, inventories swelled.
Safety stock is extra inventory maintained to make up for forecast errors.
This safety stock reduction strategy never was implemented, increasing the inventory carrying cost and making the original well-
intentioned quicker shipment goal a bottom-lime.
Share your own new business term using Contact Us.
Return to the Business Terms? Home page.
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