Планирование и калькуляция с открытой оплатой
Видео: База данных в Access — учет товаров на складе 2023
Определение Open-To-Buy
Open-To-Buy (OTB) — это товар, который предлагается для покупки в розничном магазине в течение определенного периода времени, который еще не заказан. Другими словами, сколько инвентаря я могу купить, не попадая в неприятности. Это также процесс планирования продаж и закупок товаров.
Планирование с открытой покупкой
Хороший контроль за запасами имеет решающее значение для обеспечения достаточного уровня запасов для увеличения объема продаж.
Слишком много инвентаря (или неправильного типа) в определенные периоды может замедлить ваш денежный поток и уменьшить прибыль с слишком большим количеством уценок. С другой стороны, если вы недокупите (то есть купите слишком маленький продукт) и пропустите возможности продаж, то вы не создаете свою потенциальную прибыль (плюс ущербность клиента). Розничный торговец может быть уверен, что в нужное время будет располагать нужное количество правильных продуктов, используя план Open-To-Buy (OTB).
«Открыть-купить» можно рассчитать в единицах или долларах. Однако лучше использовать доллары, поскольку существуют значительные различия в стоимости между продуктами. OTB — это, по сути, разница между тем, сколько инвентаря необходимо и сколько фактически доступно. Это включает в себя физический инвентарь под рукой, транзит и любые невыполненные заказы.
Чтобы воспользоваться специальными покупками или добавлять новые продукты, некоторые из долларов OTB следует сдержать.
Это также позволяет розничному продавцу реагировать на быстрореализуемые предметы и быстро восстанавливать полки. В моих магазинах я резервировал 10 процентов моего OTB для выплат или специальных покупок у поставщика. Всегда были продукты, которые, как я знал, не были бы переупорядочены, но добавили бы цвет или «поп» в магазин или, в некоторых случаях, дополнительное особое значение в цене.
Рассмотрите возможность сохранения плана OTB для вашего бизнеса в целом, а также план для каждой категории товаров, которые вы продаете. План можно сохранить на бумаге, в электронной таблице или приобрести один из нескольких доступных розничных программных пакетов, содержащих программы Open-to-Buy.
Формула Open-to-Buy
Планируемые продажи
+ Планируемые разметки
+ Планируемый конец месяца Инвентаризация
— Запланированное начало инвентаризации месяца
——— ———————————
= Open-To-Buy (розничная торговля)
Например, розничный торговец имеет уровень запасов в размере 150 000 долларов США 1 июля и запланировал инвентаризацию на конец года на сумму 152 000 000 долларов США на 31 июля. Плановые продажи для магазина составляют 48 000 долларов США с 750 долларами в запланированных уценках. Таким образом, у розничного торговца есть 50, 750 Open-to-Buy в розницу.
Примечание : Умножьте это число на начальную разметку, чтобы достигнуть OTB по стоимости. Если наша разметка составляет 40 процентов, тогда наша цена открытия по цене составляет 20, 300 долларов.Эта начальная разметка также известна как IMU. Вот отличная статья, которая поможет вам в этом расчете.
Прежде чем приступить к реализации плана Open-to-Buy, спросите себя, реалистично ли каждый номер. Имеет ли смысл то, как вы занимаетесь бизнесом? Имейте в виду, что многие из показателей вашего плана инвентаризации являются только рекомендациями.
Хорошее эмпирическое правило: если ваш фактический конечный инвентарь находится в пределах пяти процентов от вашего плана, вы делаете очень хорошо.
Еще одно соображение здесь — оборачиваемость запасов. Возвращаясь к тому, что мы говорили раньше, когда слишком маленький продукт может привести к тому, что вы пропустите продажи, и слишком много продукта может привести к тому, что вы съедите свои наличные деньги, то, как мы измеряем, это через оборот запасов. Вот замечательная статья, объясняющая эту формулу.
Пример 6-месячного плана
| 6-месячный план OTB | Июнь | Июль | Август | Сентябрь | Октябрь | Ноябрь |
| Начало месяца инвентаризации $ | 155, 000 | 150, 000 | 152, 000 | 157, 000 | 157, 000 | 165, 000 |
| Продажи | 47 000 | 48 000 |
Калькуляция капитальных затрат Рабочий лист
Научиться строить рабочий лист для расчета прироста капитала. Посмотрите, как работает математика и как организовать данные об инвестициях для целей налогообложения.
Вклад Коэффициент маржи Определение и калькуляция
Коэффициент доли вклада указывает процент от продажи каждой единицы, доступной для фиксированной стоимости и прибыль.
Криогенное планирование недвижимости: планирование глубокой заморозки
Процесс крионики — это новый вариант, доступный для физические лица. Важно понять это, чтобы вы могли создать план недвижимости, который будет отвечать вашим потребностям, если вы захотите криогенно заморозить.
Open To Buy Plans
As the apparel industry has been negatively impacted by the coronavirus outbreak on every imaginable level; It is not all gloom and doom though since online sales has increased this year due to the global pandemic. Just like any business, having a fool proof inventory is the best way you’ll guarantee that you have enough stock on hand to meet demand. Having a surplus inventory on the wrong product can slow your cash flow and reduce profits if you’re forced to mark items down. At the same time, under buying a product which is in demand can result in missed sales opportunities, hurt your profit or even damage customer experience.
An Open-to-buy (OTB) plan can help businesses sell multiple brands, products and help decide how much inventory to buy or manufacture while keep the cash flow positive.
Understanding Open-to-Buy: A break down of business saving formula
An Open-To-Buy relates directly to retail merchandise, is structured specifically to address the needs of retailers, and is a tool designed to assist retailers manage and replenish their most significant asset. It helps purchasing budget for future inventory orders that a retailer creates for a specific period. An OTB plan helps a retailer stock the right amount of the right products at the right time by showing the difference between how much inventory is needed and how much is available. This includes physical inventory on hand and in transit, as well as any outstanding orders.
Business succeed when they plan ahead. OTB not only helps you better plan inventory purchases, but it’s also a budget that can help you understand where to tighten the belt. For instance, lets say your business has a total for $50,000 in inventory. Creating and managing an OTB plan can help you carefully manage products(merchandise) across your business for that year. This kind of organizational planning can help save you 10% in costs meaning you’d have an extra $5000 to invest elsewhere.
While working as a merchandiser the OTB were mainly calculated in dollars since the company transacted with their buyers in that currency. It is usually calculated in terms of cash since there are different variation of costs between products. The good thing about OTB plans is that they can be flexible and does not necessarily apply to one product category or one department.
Inventory Turnover
Business need to have a fool-proof inventory. For that to happen, they need to have an inventory turnover. Inventory turnover shows how many times an organization has sold and replaced its merchandise during a given period. This in return, helps businesses make better decisions when purchasing or manufacturing new products.
Part of creating an OTB budget involves planning inventory turnover. Turnover is a calculation that measures how fast you sell through inventory and need to replace it. The quicker a retailer “turns” their inventory, the more they’ll need to buy or make in a year.
Inventory turnover is calculated during a given timeframe using the following formula:
Sales / Inventory= Turnover Rate
This equation can go a long way for any business because it gives you an understanding of your inventory. For instance, if you sold $3000 worth of fried chicken in your family chicken shop and had $1500 worth of chicken, then your inventory turnover would equal to 2 (3000/1500 = 2). Meaning you turned over your inventory two times during the day.
The Open-To-Buy Formula
The open-to-buy formula will help you create forecasts for your OTB plan. The values in your open-to-buy are projections, so they may not be perfectly accurate. But a sensible way to check your numbers is if your actual month-end inventory is within 5% of your prediction.
Here are some of the definitions I have used when preparing my OTB plans:
Planned beginning of month inventory: How much inventory you plan to have at the start of the month, usually in dollars or a currency of your choice
Planned Sales: How much sales you forecast during that given month
Planned Markdowns: A projection of product markdown. ( usually from 25% to 75% depending on the demand of the product)
Planned Open to Buy Dollars: The dollar amount that you have available to buy more inventory at the end of the month
Planned End of Month Inventory: A forecast of balance inventory at the end of the month. End-of-month inventory carries over to become the beginning-of-month inventory for the next month.
Planned Sales + Planned Markdowns + Planned End of Month Inventory — Planned Beginning of Month Inventory = Open-to-Buy
Here’s an example of an open-to-buy plan for a single month, November 1–30:
$10,000 (Planned Sales) + $250 (Planned Markdowns) + $15,000 (Planned End-of-Month Inventory, October 31) — $20,000 (Planned Beginning-of-month Inventory, November 1) = $5,025 (Open-to-Buy at Retail)
Calculate Your Open-To-Buy at Cost
Initial markup (IMU) is the calculation used to determine the retail price of an item in your store. For example, if you have a pair of denim trousers that costs you $7 to make then the IMU is the measurement of how much you mark up the wallet when you sell it to the customer.
If your IMU is 75%, you would use this calculation to determine your retail price:
Cost or Wholesale Price / (1 — IMU %) = Retail Price
- Convert the markup percent into a decimal: 75% = .75
- Subtract it from 1 (to get the inverse): 1 — .75 = .25
- Divide the wholesale price by .25
- The answer is your retail price
$7 Cost or Wholesale Price / (1 — .75) = $28 Retail Price
Your initial retail price must cover the cost of the product and the selling expenses that are associated with the item. You’ll also want it to cover a portion of your business’s day-to-day overhead such as the cost of your website each month and marketing — you want to be left with some profit.
To figure out your OTB at cost, multiply the OTB value by the initial markup. For example, using the one-month calculations from above, if your markup is 75%, your open-to-buy at cost for those denim pants you want to stock in your store is $10,350 x .25 = $2587.50.
Creating Your Open-To-Buy Plan
You can start by creating a six-month open-to-buy plan that takes the form of a spreadsheet. Many small- to medium-sized retailers plan their OTB month-to-month, but for businesses with high spikes in seasonal sales, try creating a weekly OTB plan.
Over time, you will learn and adapt your OTB plan each season or year based on your unique business’ sales and markdown history.
Before you put your OTB plan into operation, make sure you carefully review each number and ask yourself if it’s realistic.
Open-To-Buy Planning — What is OTB for Retail?
Every retailer has sales and inventory plans, but how they interact is often misunderstood, or at least underappreciated. The solution is open-to-buy (OTB). By ignoring this critical tool, operations leaders risk mismanaging their most expensive asset, inventory. Here’s more about OTB and how to use this formula to ensure successful inventory management and budgeting for your business.
What is Open-To-Buy?
So, what is OTB? You’ve likely heard the phrase, but the specifics may still be a bit foggy. This post will introduce OTB, retail best practices and the power of merchandise planning technology. It will also take a look at the purpose of planning in a system like Toolio, which is to make sure the right product is in the right place at the right time at the right price. Let’s dig in.
Open-To-Buy Definition
Open-to-buy (OTB), then, is essentially a budget for future receipts contained to a point in time. While it should be used by nearly all retailers, it is especially important for multi-location or multi-channel retailers to ensure productive inventory across all locations and channels. When the calculation is done correctly, it will result in a solid budget for buyers or production teams to plan their incoming receipts.
It’s helpful to note that OTB can either be expressed in units, retail dollars or cost dollars, depending on your goals and needs. Furthermore, OTB is not a static tool; it requires actual numbers to roll in for the current window and future plans to be adjusted to trend to inform its accuracy. Open-to-Buy is also called a WSSI, or Weekly Sales, Stock and Intake report, which is the more commonly used terminology for this tool in the UK and Europe.
This is where Toolio can help greatly by feeding in actualized data. It can help you see whether you’re going to miss an inventory target due to a canceled item or end up over-inventoried because of a missed sales plan. Toolio’s automatic actualization of the data feeding in from your tech stack empowers you to quickly adjust sales and inventory plans to give you a more accurate picture of your OTB.
When to Conduct Open-to-Buy Budgeting
It’s important to note that OTB isn’t something you “set and forget.” Since it’s dependent upon accurate data, you must reassess it weekly while in-season. The best time to do this is when the prior week’s data has come in. This way, you can continue to adjust the numbers based on where your inventory and sales targets actually stand, giving you real-time insights that allow you to plan more effectively.
For example, you may have projected your sweater sales rather conservatively, expecting the winter chill to have died down by a certain date. But when a cold spell sets in, your data may reveal that your actual sales are outpacing your projections. This tells you what to reorder and what not to reorder — which in this case might be sandals or another hot-weather item. It also gives a clearer perspective into the best way to earmark the OTB budget that’s left.
When it comes to timing, lead times are also key to understanding the greater picture of OTB. Your lead time is how long it will take for a given product to be made and then moved (from its starting point to its final destination). In Toolio, you can put in your lead times based on your date and then automatically see the date by which you must place the order. This is very helpful in making sure your goods arrive on time.
The OTB Retail Formula
The formula for calculating an accurate OTB for a retail company is your receipts minus on-order commitments. For example, if you’re planning to receive 100 dresses and have 50 on-order commitments, your OTB would be 50. In other words, you’d still have 50 units that are open for buying. With this in mind, proper OTB planning requires the right timing, which also necessitates the right sequence. First come your sales targets, then your inventory plans. From there, you can calculate a receipt plan which drives your OTB. Here’s a deeper look at how this works.
OTB Budgeting Step-by-Step Guide
1. Determine the Right Sales Budget
Before you can calculate OTB, you must determine your sales plan. One major mistake companies make is setting sales targets without thinking about how to achieve those targets. For instance, they may say they want to reach $1.2 million in sales for the year since they reached $1 million the previous year. But, without understanding their inventory position to support such sales, they’re not set up properly to accomplish the goal.
This is why we recommend starting by setting sales AND inventory targets, remembering to consider the capacity of your stores and warehouse when doing so. Then, from your sales and inventory targets you will calculate your receipts. You want to have positive receipt plans each month to support the concept of freshness, since new receipts continually flowing in go a long way in keeping the customer excited.
There are other factors that can affect your receipts, like planned markdowns or which items you have on-hand versus on-order. But, what’s detailed above is the easiest, most straightforward way to get started calculating your sales plan and OTB. You can always get more nuanced later, as needed.
2. Use the Right Product
When you build your sales and inventory targets, it needs to be done on different levels of hierarchy (e.g. product, class, category, division). Getting granular like this will help you plan so you’re not over- or under-inventory in specific products. Instead of simply grouping items together under “sweaters,” for instance, you should break them down further into “cashmere sweaters,” “hoodie sweaters,” “sweater dresses” and so forth. This way, you can be more accurate with your open-to-buy by class or category and not end up with way too many items left (over-inventoried) or won’t run out of stock of another item (under-inventoried).
3. Factor in the Right Place
Location matters in retail, and therefore in your sales and inventory projects. When you’re planning your OTB, incorporate the region or individual store, website or brick-and-mortar shop and so forth. This can help you map out products needed in order to round out underperforming and over-performing categories.
For example, consider galoshes. If you plan for your inventory to be spread evenly among all your stores in every region, you’re going to end up with underperforming and over-performing stores. After all, customers in the Southwest have far less need for galoshes than those in the Northwest. So, plan around geography. Galoshes should be heavily stocked in the Northwest (and sales projections significantly higher) than they should in the Southwest. These factors must be taken into account in order to shape an accurate OTB.
4. Set the Right Price
As previously mentioned, you can create an OTB using units, retail dollars or cost dollars to hit certain targets. Oftentimes, when someone is managing physical stores, it makes sense to plan at the unit level since items will be taking up physical space in the stores. If you’re managing warehouses, conversely, it may not matter as much and could make more sense to plan based on dollars. There are also pre-built calculations in Toolio that can help you convert between units and dollars, which can save you a lot of time and frustration — and help you hit margin targets.
Another aspect of setting the right price is planning to strategically spend your OTB to take advantage of special buys from wholesalers, manufacturers, etc. At the same time, you also must make sure your OTB is filled by the time your lead time is up. Let’s say you have a 16-week lead time from most of your partners. If your OTB hasn’t been filled by about four months out, you will be scrambling to fill it (or else you may not be able to get the product anymore).
OTB Limitations
The value of OTB is extensive, but it doesn’t cover every type of planning. Refilling your stock of day-to-day basic products is not the best application for OTB, for instance. Staple items can be managed by using preset minimum and maximum inventory numbers, through an automatic replenishment program. It’s also important to note that OTB should be considered along with other metrics in order to be most useful (e.g. order cycle time, inventory carrying costs, etc.) and not treated as an island.
How Much Inventory Should I Have?
Your OTB calculation will help you figure out how much to buy but sometimes there are challenges that get in the way. One that happens rather frequently is when an organization makes the mistake of not revisiting their OTB, which can throw a wrench in its accuracy. If an order is canceled, for example, your OTB would be larger since you’d have more money to spend. So, you must take the actualized data into account to accurately manage your inventory.
Let’s say you're outpacing your sales projections for leggings. If you keep an eye on your actualized data, you’ll notice this and will need to re-trend the season since your sales plan wasn’t aggressive enough. Re-trending your season will then increase your receipts plan, which of course impacts your OTB. It’s all connected. Also remember that even if something is over-performing (like leggings), something else is probably underperforming. Maintaining an accurate OTB and the right inventory levels means you have to keep your eye on the real data and continually adjust accordingly.
Conclusion
OTB planning is essential to bridging the gap between your retail operations and planning. If you want to get better at OTB, check out our free template here.
Want to drastically improve at OTB? Sign up for a Toolio demo here and see firsthand how our data actualization and end-to-end planning can be a game-changer.
OPEN TO BUY (OTB)
This is a complete guide to the OTB (Open-to-Buy) concept in retail, and a detailed step-by-step explanation of the entire process. The Open to Buy process is used to calculate how much inventory the business should buy.
You will learn about:
- Open to Buy (OTB) Definition
- Retail Buying Plan Template
- Open to Buy Budgeting Steps
- Importance of OTB
- Retail Buying Plan Considerations
What is Open to Buy?
Open to Buy Definition
OTB stands for Open-to-Buy . It is the amount you need to buy products with, in order to achieve the set sales budget for a certain period, usually 6 months. It is calculated at cost and assigned to different product categories based on each category’s contribution to total sales mix.
Importance of Open to Buy in Retail & Ecommerce
OTB calculation is one of the most important tasks to master when starting a retail business . Failing to calculate the open to buy budget can be detrimental for the business, due to stock problems that will soon arise from improper planning. In fact, a lot of retail & ecommerce startups fail, mainly due to cash flow problems created by poor inventory management.
These businesses often buy too much inventory, relative to their sales, and fail to clear this inventory on time to be able to buy fresh new merchandise. They end up clearing the excess merchandise at deep discounts, which affects their profitability, their brand value, and their ability to sell at full price in the future.
Some businesses face the other side of the problem, i.e not having enough inventory. This affects their ability to deliver their sales goals, and pay their operating costs.
So, identifying the right amount of inventory to buy, is one of the most critical skills to master for any retailer.
How Much Inventory Should I have?
The amount of inventory you should start your retail business with, or keep on hand all-year round is determined by your forecasted sales. Once you have established your sales budget or forecast for the year, you will be able to calculate exactly how much inventory you need to deliver those sales, as well as to have enough stock cover, so that you don’t run out of stock and lose sales in the process.
The scientific method to calculate how much inventory you should have is the Open to Buy process. It takes into consideration your sales, margins and desired stock level, and applies a certain formula to determine how much inventory you should buy.
We explain the process in details in the below video, and the rest of this guide.
Note: The template used in the video is available in members area, with a complete guide on how to use it.
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When Does The Open to Buy Budgeting Happen?
The OTB budgeting comes after the sales budgeting step in the retail buying process and is followed by the actual ordering step.
What is The Outcome of The Open to Buy Process?
If you perform the OTB calculation process properly, you will get the dollar amount for purchases for the next period (e.g. 6 months), segregated into product departments or categories.
Based on that amount, you can start placing your orders from your suppliers and plan them to arrive at different intervals during that period (6 months).
Steps of Open to Buy Planning
Here we will explain the steps of creating a retail buying plan for a 6 months period, and we will use an example of July 2020 to December 2020. This means we want to plan for the orders that we will place in order to arrive in the period from July 20 to Dec 20.
Buying Plan Steps
- Set your sales budget
- Define your margins
- Define your targeted inventory turns
- Get your opening stock at cost
- Calculate the buying plan
Step 1: Set Your Sales Budget
You start by setting the sales budget for your retail stores from the time of planning, up until 6 months after the period you are buying for. In the above example that is an 18 months forecast.
If you already do annual sales budgeting for your business, you will already have the sales budget for the first 12 months. For the next 6 months you can copy the budget for the same period from this year and apply any growth/de-growth you expect.
Note: We have a step-by-step sales & margin budgeting guide in the members areas and a full sales and P&L budgeting video course
- The step by step retail budgeting process
- Set monthly targets adjusted to seasonality
- Templates download & practice exercise
Step 2: Define Your Margins
Define your realized margin for the sales you budgeted and forecasted in the previous step. This should take into considerations any markdowns you will carry during these periods.
Step 3: Define Your Targeted Inventory Turns
How many times do you plan to turn your inventory in a year?
This is used to define the closing stock level.
The closing stock should provide the appropriate forward stock cover at the end of the budgeted period, based on the targeted inventory turns for the year.*
For example , if the business is targeting 2 turns per year, then the closing stock should provide a 6 months cover. If the targeted turnover is 3 times per year, then the stock cover should be 4 months, .. and so on.
For fashion, 3 to 4 turns per year are considered good, so maintaining 3 to 4 months cover is appropriate.
We keep an updated benchmarks list for inventory turns and other KPIs for different retail segments. You can use this as a benchmark for your business, based on which category your business belongs to.
* Our OTB excel template displays the forward stock cover separately for each month, so the planner can increase/decrease their purchasing amount accordingly. This also helps during the year while updating the sheet with actual sales data as the months roll in, to show the current stock cover and take corrective actions if needed
Step 4: Get Your Opening Stock at Cost
Your opening stock is the stock value (at cost) that you carry at the beginning of the period you are budgeting for. For our example here this would be at the beginning of July 2020.
If you were budgeting for a period that starts tomorrow, this would have been your current stock value (at cost). However; since we always budget for a period well in advance (usually 6 months ahead) this would mean calculating your opening stock well in advance.
Note: If you are using the Open to Buy excel sheet, you don’t need to perform the below calculation manually. You will enter the beginning inventory for Jan 2020, and afterwards the opening and closing stocks will be calculated automatically, based on the sales figures and intakes you provide.
To manually calculate the opening stock, check the example below:
You are now in Jan 2020 and want to budget for July 2020 to Dec 2020 . You will need to get the opening stock for July 2020.
This will require you to extract the current stock on hand that you have (at Jan 2020) and then subtract from it any stocks that you will sell from Jan to June 2020 and add to it any stock that will arrive between Jan to June 2020.
Example
Current stock level (Jan 2020) at cost = 100,000$
Sales from Jan to June are 200,000$ at 60% margin
COGS from Jan to June = 200,000 $ x (1-0.6) = 200,000 x 0.4 = 80,000 $
Receiving (orders) that will arrive in March 2020 at cost = 20,000 $
Opening stock at July 2020 = 100,000 $ – 80,000 $ + 20,000 $ = 40,000 $
Step 5: Calculate The Buying Budget
The Open to Buy Formula
Opening Stocks + Intakes (Purchases) — Sales = Closing Stocks
This Open to Buy formula accounts for markdowns by calculating sales at cost (COGS). Opening Stocks, intakes and closing stocks are also calculated at cost value, not retail value.
Once you have defined your sales, margins and opening stocks in the previous steps, you will plug those numbers in one of the Open to Buy tools we discuss below, to calculate your total buying budget.
You will then use this budget to start placing your orders that should arrive during the budgeted period (e.g between July 20 to Dec 20). If you already have placed any orders that should arrive during this period, you will simply take this out of the budget that you have and order with the remaining amount.
The stock cover that you have defined above (covered period) means that, at the end of the budgeted period (say Dec 2020) you will have enough stock to trade until the end of the covered period (e.g until end of June 2021), even if you haven’t received any more orders after Dec 2020. This is supposed to be a safety net for your business to always have forward cover, so that your stores will never have empty shelves.
Open to Buy Tools
Retail Buying Plan Excel Template
This is the retail buying plan excel template for multi-department calculation of an open to buy budget.
You can see it in action in the video above.
Open to Buy Excel
Download this template, together with other retail budget templates from members area.
The template includes monthly sales and intakes, and is expandable to include more departments/ categories. The sheet also automatically calculates the forward stock cover for each category, every month, so you can increase/decrease your purchases based on the stock cover you want to target for each category.
You can use this excel sheet to create a 6 month merchandise plan, 6 months in advance. The total months on the sheet are 18 months, and we show you exactly how to fill it in the PDF attached to it. In the members area, we also provide separate demo sales, margin & inventory data for you to practice using it.
The retail buying plan template is a very useful tool that is used throughout the year, and not only at the Open to Buy planning time. Once you have ordered your inventory, you can start tracking actual sales and intakes every month in the sheet, and this will allow you to always be on top of your inventory.
You will be able to spot any stock build-ups quickly and take actions (like markdowns or delaying orders) on time. You will also be able to see if your stock level is becoming too low for some categories, and adjust your buying accordingly.
Terminology of The Open to Buy Template
Opening Stock: The amount of stock (at cost) you have at the beginning of the period.
Forecasted/Actual Intake: The stocks you are receiving, whether already ordered or still to be ordered.
Forecasted/Actual Sales: Actual or budgeted sales for that month/period
Closing Stocks: Stocks (at cost) at the end of the period
Forward Cover: How many months your current stock on hand will cover your sales.
Online Open to Buy Calculation Tool
The second option to calculate your retail buying budget is our online Open to Buy calculation tool, which is a quicker, easy to use, step-by-step tool for retail & ecommerce store owners to calculate their buying budget by department/category or class.
The OTB tool supports up to 6 product segments (departments/categories/classes) in one process and can be used multiple times for more segments. It operates on a period basis (not monthly), so you can choose this period to be 4 months, 5 months, 6 months. etc, based on your entered data.
It will take you through the process step-by-step and give you at the end the buying budget segmented by the segments you entered at the beginning (e.g if you want department level, enter department sales.. if you want category level enter category sales… and so on). You then use these amounts to start placing your orders.
Both, the template and the online tool are included in all membership plans.
Open to Buy Considerations
Why 6 Months Open to Buy Plan?
The reason for choosing 6 months as a default period for a retail buying plan is because usually collections are segregated into Spring/Summer and Autumn/Winter and manufacturers usually require orders to be placed 6 months in advance, so that products will be available at your stores at the right time to launch the season. That’s why it is better to have a rolling 6 months budget ready at all time.
Also when you have your OTB for a 6 months period ready, you can place your orders based on their order lead time, not necessarily 6 months in advance.
For example, you can have a distributor that ships your products once you order them, and they arrive within a week or two. In this case, you will utilize the already planned budget for that category and order 2 weeks before you need the products in your stores.
Also having a 6 months rolling buying budget ready all the time means you only have to do this exercise twice a year.
However; we do recommend revisiting your Open to Buy plan regularly and updating it with actual sales as the months start rolling, so you can rectify if you are not meeting your sales budget or if you are making much more sales than planned.
For example: If you are far behind your sales budget and still have some orders not placed you will be able to reduce those orders based on the current sales trend and avoid an overstock situation later on.
If you do not start rectifying the problem within the season, by clearing the extra stocks regularly or adjusting your buying, your OTB for the following 6 months will be automatically lower because your closing stocks will be high.
This means less Open to Buy budget to buy fresh stocks for the coming season and this will affect your sales.