What Is an Open-to-Buy Plan? Why Every Growing Brand Needs One

What's an Open-to-Buy Tool and Why is it Important?

If you’ve been diving into inventory planning or demand planning for your retail or DTC brand, you’ve likely heard the term Open-to-Buy (OTB). But what exactly is an open-to-buy tool — and how do you know whether your growing business needs one?

Let’s break it down.

An Open-to-Buy plan is essentially a retail inventory management tool that functions like a checkbook for your merchandise. It helps you plan, monitor, and control your inventory levels by comparing what you planned to buy with what you actually need based on updated sales trends.

When sales outperform expectations, inventory depletes faster. When sales slow down, inventory piles up. An open-to-buy tool gives you the visibility and flexibility to adjust quickly — before stockouts or excess inventory impact your cash flow and margins.

For any scaling retail business, especially those navigating multichannel growth, OTB planning is one of the most important tools for supporting:

• Inventory optimization

• Cash flow management

• Smarter purchasing decisions

• Forecast accuracy

• Long-term merchandise planning

If you're aiming to stay in stock on top sellers without tying up unnecessary cash in unproductive inventory, an open-to-buy tool becomes non-negotiable.

What Metrics Does an Open-to-Buy Tool Use?

While each retailer may tailor their OTB tool to match their business model, several foundational metrics always show up. These metrics help align your sales forecast, inventory forecast, and purchasing strategy into one cohesive view.

1. Plan Sales (at Cost)

These are your planned monthly sales, typically using COGS rather than retail dollars. Using cost ensures your OTB aligns accurately with how your inventory investment flows in and out of the business.

2. Plan Receipts

These are the inventory receipts you originally planned to receive each month. Again, tracking at cost is best practice for retail OTB planning.

3. Plan BOH (Beginning On Hand)

Your planned BOH is the amount of inventory you expect to have on hand at the beginning of the month. The OTB process helps you stay aligned with these targets so you don’t drift too heavy or too light.

Once these plan metrics are established, the open-to-buy tool becomes even more useful when you layer in your actuals.

Actual Metrics You’ll Reconcile Each Month

To maintain accurate inventory planning and demand forecasting, your OTB must incorporate real-time updates:

• Actual Sales (COGS)

• Actual Receipts (COGS)

• Actual BOH inventory

This updated data lets your OTB tool project your future BOH with accuracy — BOH → minus sales → plus receipts — helping you anticipate inventory issues before they become costly.

Forecasting Metrics for Staying Agile

Since retail rarely (if ever) goes exactly as planned, you’ll use your OTB tool to update:

• Forecast Sales — revised based on current sales trends

• Forecast Receipts — revised based on vendor updates, timelines, and purchasing needs

This is where your OTB tool becomes a powerful inventory optimization tool, helping you adjust for real-world performance.

The Core Metric: Open-to-Buy

Your Open-to-Buy number tells you how aligned your current inventory is with your plan:

• Negative OTB → inventory is heavy (you have more on hand than planned)

• Positive OTB → inventory is light (you can — and often should — purchase more)

You can think of your OTB as your inventory spending checkbook. It keeps your purchasing decisions rooted in data, not guesswork.

If OTB is positive, you may accelerate POs or restock faster.
If OTB is negative, you may delay receipts, cancel orders, or slow down purchasing.

This proactive approach is essential for protecting cash flow and maintaining a healthy inventory position.

How Should an Open-to-Buy Tool Be Used?

An OTB tool is only as effective as how consistently you use it. Brands that succeed with OTB planning typically:

• Review the OTB at the beginning of each month

• Compare plan vs. actuals

• Update their inventory forecast based on new data

• Evaluate purchasing needs by category

• Align decisions with weekly sales recaps and sales trends

For many brands, using category-level OTB tools provides even more clarity. This allows you to zoom into which categories are heavy, light, fast-moving, or lagging — informing smarter merchandise planning and demand planning decisions.

The more your business grows, the more crucial visibility becomes. OTB tools give your team a forward-looking snapshot of inventory health, helping you anticipate problems, stay agile, and protect profits.

Get More From Your Open To Buy Tool with Boon

Now that you understand what an open-to-buy tool is and why it’s essential for growing retail and DTC brands, you may be ready to incorporate one into your inventory planning process.

Enter your email below to download Boon’s easy-to-use OTB template — the same structure we use to help clients optimize cash flow and prevent both stockouts and inventory bloat.

Want deeper support?

Book a free call with us to learn how Boon can:

• Build custom inventory planning tools for your brand

• Set up and run your open-to-buy process

• Improve forecast accuracy with item-level planning

• Support demand planning and merchandise planning as an extension of your team

Your inventory is one of your biggest investments — the right OTB tool ensures you’re getting the best return from it.