Creating an Open-to-Buy plan
How to create and configure an open-to-buy plan.
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Written by Sara Jaffer
Updated over a week ago

To begin, access the Open-to-Buy planner on the left-hand navigation bar and select “+ New Plan” at the bottom of the page.

A modal window will appear, asking you to name the plan and select the grouping method to use for your planning.

You can choose between Category, Vendor and Brand. The selection here will determine how the data in the plan is grouped.

You can also select a warehouse to filter by. If you do not select a warehouse at this stage, you will be able to change the warehouse on the report at any time when viewing it.

Configuring the OTB plan

When configuring your OTB plan, you should consider how to enter your revenue and stock goals. There are two options:

  • Total (top-down)

  • Category (bottom-up)

You can choose the method you want to use at the top of the OTB plan.

Top-down planning allows you to enter your goals at a total level. Inventory Planner then attempts to set the same goals for every category, brand or vendor. (Note that revenue for each category, brand or vendor/supplier will be based on the last two months’ sales distribution.)

Bottom-up planning allows you to enter your goals for each category, brand or vendor individually. Inventory Planner will then calculate the total goal based on the individual figures you have entered.

Once you have decided the method of planning to use, you can set your goals. There are two kinds of goals to enter:

  • Planned revenue

  • Forward stock cover

Setting planned revenue

Planned revenue is the target revenue you would like to achieve in a period.

When setting the planned revenue, adjust the date range for your report on the top right-hand side of the report, then begin inputting your planned revenue goals month by month.

You can use the “Action” button at the bottom of the page to configure planned revenue goals based on either the prior year’s sales (“Seed from Prior Year”) or your current forecast (“Seed from Sales Forecasting”). Learn more about how Forecasting and Replenishment is calculated here.

Example

For this example, we will calculate planned revenue goals automatically based on a +10% adjustment compared to last year’s actual revenue.

On the OTB report, click Action > Seed from Prior Year to open the modal window. Enter “10” into the percentage adjustment field, then click “Apply”.

This will fill in the relevant planned revenue fields.

Setting forward stock cover

Once your revenue goals have been entered, you can move on to your stock goals.

For each month, enter the Forward Cover for the next month, where forward cover is defined as the number of months you would like to cover as of the beginning of that month.

Inventory Planner will then use the forward cover entered to calculate your Open-to-Buy at Retail for the previous month. Open-to-Buy at Retail is the additional stock that should be received during a month to ensure that planned stock goals for the following month are achieved by the end of the current month.

For example, if the forward cover in May is set as “3”, Inventory Planner will generate the plan for April to ensure that enough stock is received by May 1st to cover planned revenue between May and July.

(Note that the following screenshot is of the report before April's Closing Stock is recalculated based on OTB recommendations.)

Open-to-Buy at cost and units

You can also use the OTB report to calculate figures for Open-to-Buy at Cost and Open-to-Buy at Units. These figures are converted from the Open-to-Buy at Retail calculation and are useful for decision-making regarding budgeting.

Input the Margin to calculate Open-to-Buy at Cost.

Input Average Selling Price to calculate Open-to-Buy at Units.

Additional Considerations

There are a few additional things to keep in mind when setting up your plan.

  • Spot Cover: Also known as “Flat Cover”, spot cover is calculated automatically as Opening Stock divided by Planned Revenue within the current month. Spot cover will be calculated automatically (grey arrow) once forward cover is entered.

  • Stock Orders: Existing stock orders and PO receipts are captured in OTB automatically and will be reflected at Retail value (black arrow). Note that planning must happen in retail dollars for an apples-to-apples comparison. Cost is only converted at the end by inputting a margin, as explained above. Learn more about how purchase orders affect OTB here.

  • Markdown: The markdown represents the difference in revenue that is expected between selling goods at their regular price vs. their actual price. To add markdowns in the OTB table you can select the gear icon in the top right of the screen. Note that they must be entered in Retail dollars (red arrow).

    Markdown = (Gross Regular Revenue - Gross Revenue) * Quantity

Additional filtering and customization

The OTB report is highly configurable. Some additional useful customization is highlighted below:

Compare metrics from previous years

Select rows using the gear icon in the top right to compare metrics against Last Year (LY) or Two Years Prior (LLY). Select “Reset” any time to restore the default rows.

Remove categories

If you are grouping your OTB plan by category, you can remove any unnecessary categories from the OTB plan by selecting Actions > Category Organizer.

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