How To Calculate Open-To-Buy
About.com has a page on Open-to-Buy wherein they teach you how to calculate OTB for a typical retail business. It’s a bit oversimplified, but the concept is good to understand. It’s a good primer for growing small retail businesses that are just getting into OTB planning and need some help.
The OTB formula shared by About.com is this:
Planned Sales
+ Planned Markdowns
+ Planned End of Month Inventory
– Planned Beginning of Month Inventory
—————————————-
= Open-To-Buy (retail)
At the bottom of the page, you’ll see some links to an Open-to-Buy template and an Open-to-Buy Wizard. I can’t vouch for these as I haven’t seen them. About.com suggests three ways to plan for OTB.
- Plan it on paper
- Use a spreadsheet
- Buy a software package
Planning your OTB on paper can be tedious. You don’t want to have to perform mental math every month just to keep up with your inventory.
A spreadsheet is a little better, but it’s still primitive compared to the software package model offered by ChainDrive.
ChainDrive’s OTB solution does more than just calculate your Open-to-Buy each month. You get dynamic controls that put you in charge of the process. Using historical analyses, you can compare your actual inventory levels and markdowns with actual retail data. You can also lock down data to keep it from interfering with narrowed down calculations you want to view.
With ChainDrive’s Open-to-Buy software solution, you can segment views, graph your data, and plan at the seasonal level – something you’ll have a hard time doing either on paper or on a spreadsheet.
Take your performance indicators to another level. Look into ChainDrive retail open to buy software today.
Call us 1.800.820.1412 or request a free demo!