Unleash the Power of Open-to-Buy: 5 Key Takeaways from Our OTB Masterclass

Navigating the ever-changing retail landscape is like steering through a stormy sea.

In these turbulent and unpredictable times, when the retail landscape is constantly changing, successfully planning for supply can feel like an impossible task.

However, amidst the chaos, there’s a beacon of hope – Open-to-Buy planning, also known as ‘merchandise planning’, ‘supply planning’ and ‘OTB’.

In our recent virtual masterclass, we were joined by David Ciacchini, an experienced business consultant – and an expert on OTB –  to find out what open-to-buy is, how it works and how retailers can use it to get ahead in 2024.

His powerful insights revealed that Open-to-Buy planning, a relatively underutilized tool in supply chain planning, can be the catalyst for retail success – if it’s understood and used correctly.

Here are five key takeaways from the discussion…

1. Understand the potency of OTB

David explained that OTB is a powerful tool for boosting profitability. He emphasized that for any retailer, inventory is their biggest and most important asset. By effectively using OTB as a part of inventory optimization strategy, retailers can get maximum value from their largest asset.

OTB allows retailers to plan inventory based on variables such as projected revenue, cost factors, and units on hand. Granular details can be factored in, including individual categories, vendors, brands, or tags.

Essentially, as David discusses in the masterclass, OTB is all about making your inventory work smarter.

2. Stories of success

During the session, David shared a compelling success story showcasing the transformative power of OTB.

It features the experiences of Lauren Cohen, a seasoned executive from top retail companies like Aldo Group and Forever 21. Cohen credits OTB with helping her make informed decisions and bypassing inventory-related issues.

Her story proved that when OTB is well-executed, it can help businesses avoid stockouts or overbuying while improving cash flow and profit margins.

3. Use forecasting to beat volatility

OTB can help retailers tackle the industry’s volatility head-on.

More than just a fancy planning tool, OTB represents a transformative methodology for stock prediction using historical data. Forecasting sales mitigates the risk of both excess stock and stockouts, ultimately safeguarding profit and cash flow.

4. Take advantage of cutting-edge functionality

David walked us through the cutting-edge new OTB features offered by Inventory Planner by Sage, including…

  • Plan in cost – based primarily on how much purchasing budget is available.
  • Plan in units –  based on forecasted demand, so merchants can see exactly how many units to buy.
  • Plan using tags – create flexible open-to-buy plans that fit the unique needs of their business.
  • Plan in retail weeks – with 4-5-4 and 4-4-5 options available.
  • Include transfers and assembly orders – factor in the quantity of inventory in other locations and soon-to-be-assembled inventory.

5. Common OTB questions answered

As part of the masterclass, retailers were able to ask David a range of questions about OTB and how it works.

These included questions on whether different lead times can be factored into OTB plans (they can) and whether they can adjust based on real-time performances, supply-demand changes, and other business factors (it was a yes to that, too).

Want to learn more? Watch the full webinar replay for free here