Open-to-Buy Planning
Dynamic OTB calculation with real-time sales tracking achieving 20-30% inventory reduction and 95%+ in-stock on key items versus static monthly budgets.
Why This Matters
What It Is
Dynamic OTB calculation with real-time sales tracking achieving 20-30% inventory reduction and 95%+ in-stock on key items versus static monthly budgets.
Current State vs Future State Comparison
Current State
(Traditional)1. Monthly OTB budget set at beginning of month: '$500K purchasing budget for September cereal category'. 2. Budget allocated across 250 SKUs based on planned sales: static allocation locked for entire month. 3. Mid-month: hot new keto cereal selling 3x forecast (stockout), but OTB budget already spent on slow-moving SKUs. 4. Buyer requests budget reallocation: 'Need $50K more for keto cereal, have $80K tied up in slow-movers'. 5. Manual approval process takes 1-2 weeks, by which time sales opportunity lost. 6. End of month: $80K excess Inventory Management on slow-movers (markdowns needed), stockout on hot items (lost revenue), OTB effectiveness 70-75%.
Characteristics
- • Enterprise Resource Planning (ERP) Systems
- • Point-of-Sale (POS) Systems
- • Spreadsheet Software (e.g., Excel)
- • Advanced OTB Analytics Tools (e.g., Anaplan)
- • Marketing Automation Tools
Pain Points
- ⚠ Complexity and Manual Processes leading to bottlenecks
- ⚠ Siloed Departments causing misalignment in forecasts
- ⚠ Demand Forecasting Accuracy issues due to external factors
- ⚠ Overstocking and Understocking challenges
- ⚠ Lack of Real-Time Adjustments to changing market conditions
- ⚠ Omnichannel Complexity in inventory management
- ⚠ Fragmented systems preventing holistic views of operations
- ⚠ Reliance on historical data that may not reflect current market dynamics
Future State
(Agentic)1. OTB Planning Agent sets monthly budget $500K with dynamic reallocation rules: 'Automatically shift budget from SKUs selling <50% of forecast to SKUs selling >150% of forecast'. 2. Agent monitors sales daily: 'Day 10 of September - keto cereal SKU#456 selling 280% vs forecast, slow-mover SKU#789 selling 35% vs forecast'. 3. Agent triggers automatic reallocation: 'Reduce SKU#789 OTB by $60K (cancel pending orders), increase SKU#456 OTB by $60K (expedite orders), net budget unchanged at $500K'. 4. Reallocation happens within 24 hours (vs 1-2 week manual approval): purchase orders adjusted, suppliers notified, Inventory Management optimized. 5. End of month results: $500K spent optimally (95%+ on right items), excess Inventory Management reduced 20-30% ($80K → $56K), key item in-stock 95%+ vs 85-90%. 6. Working capital efficiency improved through dynamic OTB allocation vs static monthly budgets.
Characteristics
- • Monthly OTB budget by category and SKU
- • Real-time daily sales vs forecast by SKU
- • Inventory Management positions and on-order quantities
- • Supplier lead times and order flexibility
- • Historical sales patterns and seasonality
- • Promotional calendar and expected demand changes
- • SKU profitability and strategic importance
- • Working capital constraints and cash flow
Benefits
- ✓ 20-30% inventory reduction through dynamic reallocation (excess $80K → $56K)
- ✓ 95%+ key item in-stock vs 85-90% (capture sales opportunities)
- ✓ 24-hour reallocation vs 1-2 week manual approval
- ✓ OTB effectiveness 90-95% vs 70-75% (budget spent on right items)
- ✓ Automated purchase order adjustment (no buyer manual work)
- ✓ Working capital optimization (spend $500K more effectively)
Is This Right for You?
This score is based on general applicability (industry fit, implementation complexity, and ROI potential). Use the Preferences button above to set your industry, role, and company profile for personalized matching.
Why this score:
- • Applicable across multiple industries
- • Moderate expected business value
- • Time to value: 3-6 months
- • (Score based on general applicability - set preferences for personalized matching)
You might benefit from Open-to-Buy Planning if:
- You're experiencing: Complexity and Manual Processes leading to bottlenecks
- You're experiencing: Siloed Departments causing misalignment in forecasts
- You're experiencing: Demand Forecasting Accuracy issues due to external factors
This may not be right for you if:
- Requires human oversight for critical decision points - not fully autonomous
Parent Capability
Merchandise Financial Planning (MFP)
AI-driven financial planning for merchandising with predictive analytics, scenario modeling, and real-time performance tracking achieving 20-35% improvement in margin realization.
What to Do Next
Related Functions
Metadata
- Function ID
- function-open-to-buy-planning