Preparing for AOP: A Powerful Checklist for CPG Companies

Get ready for AOP season with our checklist, designed to help CPG companies streamline their planning process and ensure all elements are covered.

Get monthly insights about TPx strategies in the CPG industry in your inbox.


With the end of Q1 upon us, it is time to start making Annual Operating Plan (AOP) preparations. We know it feels like you just finished 2023, and although detailed AOP planning doesn't typically begin for months, it's important to start to lay the groundwork now. Acting at this time will prepare your company to effectively manage its direction and operating plan for the next year. It is an opportunity to set up processes, establish strategic objectives and break them down into practical strategies and necessary resources for different teams. (Note: team by team responsibilities vary widely across companies, we have done our best to categorize them here)

The annual operating plan (AOP) process often involves tedious tasks of managing spreadsheets and holding continuous meetings. However, getting an early start on preparation will help you instead focus on perfecting the actual plan and managing its implementation. 

The annual operating plan (AOP) is about plotting a clear path to achieving the company’s financial goals. This operational planning should involve distributing financial resources wisely, recognizing potential obstacles and ensuring that each team member knows their role in propelling the company and financial plan forward. Adopting this approach for your annual operating plan (AOP) prepares board members and your company for a year of dedicated work and notable progress. Let’s get you ready with an annual operating plan (AOP) preparation checklist to ensure you are prepared to start planning.

Annual Operating Plan (AOP) preparation checklist for CPG companies

As the annual operating plan (AOP) season begins, CPG companies need to follow a structured, data-driven approach. This checklist will help you think early about the key preparation that will guide you through a smoother AOP season, enabling you to align the plan with your company's business goals. 

AOP is a team sport!

Each team in your organization should develop specific strategies and tactics that contribute to the overall business goals. This coordinated effort ensures that the whole company works together towards shared business objectives. The efforts of the different functional groups, while distinct, are part of a larger puzzle that must all fit together. Follow this simple checklist of activities to stay on track:

Supply Chain and Inventory Management Team

      • Conduct an internal audit for inefficiencies that can be corrected
      • Examine your supply chain for any inefficiencies that may cost time and money. Assess each supplier based on costs and lead times.
      • Assess how well inventory has been managed, looking at aspects like stock levels, turnover rates, and storage costs.
      • Identify areas where operational processes can be streamlined or automated to reduce costs.
      • Evaluate the performance of vendors and partners in terms of cost, quality, and reliability.
      • Review existing processes and workflows. Identify bottlenecks and redundancies. Ask staffing questions, where do we need more or less?
      • Review last year’s planned expenses vs. actuals, evaluate overspends across marketing, trade, and operations. 
      • Do a risk assessment, based on possible economic and supply scenarios. Identify strategies to mitigate risks.

IT Team

      • Audit internal controls, are the right systems in place to prevent errors and fraud. Review access controls for systems and data?
      • Evaluate communication channels between departments, are the right systems in place to ensure inefficiencies don’t occur due to lack of communication. Are the right collaboration tools in place?
      • Ensure KPI reporting is meeting the business needs 
      • Ensure an environment that is composable, safe, secure, and scalable 
      • Review data governance plan for efficiency and effectiveness

Forecasting Team

      • Conduct pre-AOP analytics/Deep dive into sales data:
      • Review forecasting accuracy for the past year, identify over and under-forecasts and root causes
      • Examine sales data over several years to identify long-term trends in your business.
      • Pay special attention to how sales fluctuate seasonally, which can inform future inventory and marketing strategies.
      • Analyze the performance of individual products or product lines, identifying which have been successful and which have not.
      • Make sure the right channels are in place to collaborate with marketing on new product innovation and assortment efficiency actions
      • Meet with sales team to review local market conditions impacting business

Insights Team

Marketing ROI
  • Review the outcomes of marketing campaigns, assessing which ones achieved their goals and which fell short.
  • Compare the cost of each campaign or promotional activity against the benefits it brought in terms of increased sales, customer engagement, or brand awareness.
  • Evaluate which channels and mediums have been most effective for distinct types of campaigns and customer segments.
Customer behavior analysis and segmentation
  • Examine purchasing patterns, including frequency, quantity, and timing of purchases, to understand customer buying habits.
  • Look at how different customer segments have responded to your products, tailoring future marketing and product development to these insights.
  • Use analytics to track changes in customer preferences, such as an increased interest in eco-friendly products or a shift towards online shopping.
  • Segment your customer base to identify unique behaviors and needs within different groups, enabling more targeted marketing and product development.
  • Analyze customer feedback and reviews to gauge sentiment and satisfaction levels, using this data to inform product improvements and customer service strategies.
  • Take a deep dive into your value equation, pay close attention to the impact of pricing changes on sales.
Market trend analysis:
  • Keep up to date with broader industry trends, such as new regulatory changes or shifts in supply and demand dynamics.
  • Monitor competitors’ actions, including new product launches, pricing changes, and marketing campaigns, to stay competitive.
  • Stay updated on relevant technological advancements that could impact your market, such as new e-commerce platforms or production technologies.
  • Assess how global events (like economic shifts or health crises) have affected the market and adapt your strategies accordingly.
  • Use social media to anticipate any upcoming trends you may be able to capitalize on.
  • Conduct a competitor analysis - understand each competitor’s strategy by consumer segment.
Predictive analytics:
  • Use predictive models to forecast future sales trends based on historical data, market conditions, and customer behavior insights.
  • Predict future demand for products, considering factors like seasonality, market trends, and economic indicators.

Finance Team

    • Analyze past AOPs, identify trends, successes, and areas for improvement. Where did the company execute well against its goals? Where did we not? 
    • Prepare and assess financial statements, key performance indicators and profitability metrics. Look for anomalies and patterns.
    • Establish corporate sales targets:
    • Collaborate with leadership first and engage with department heads to align on strategic objectives. Get the organization to define and align on clear financial targets.
    • Analyze past sales data to establish benchmarks and identify growth trends or patterns.
    • Consider current market conditions, including competitor performance and market share, to set achievable sales targets.
    • Set specific targets for different product lines, considering their individual market performance and potential.
    • Tailor sales targets for different regions and customer segments based on their unique characteristics and past performance.
Establish Profit goals:
    • Review all operational costs, including production, logistics, and overheads, to understand their impact on overall profitability.
    • Identify strategies for improving profit margins, such as cost reduction, pricing strategies, or efficiency improvements.
    • Consider broader economic conditions that may affect profitability, such as inflation rates or changes in consumer spending power.
    • Does the organization have a plan in place to achieve the profit goals? What needs to be changed?
    • Departmental budget allocations set the stage early for any major changes that need to occur in departmental budgets so that departmental changes can be planned for early.
Trade budget allocation:
    • Ensure that trade budgets are allocated in a way that supports and enhances your sales targets.
    • Plan for trade spending on promotional activities, ensuring they are strategically used to boost sales and market presence.
    • Keep some flexibility in your trade budget to adapt to unforeseen market changes or opportunities.

Revenue Growth Management and/or Trade Planning Team (may overlap with Finance)

    • Prepare and update base projections – whether through an internal data science team or with your TPx/RGM vendor, review baseline projections vs actuals for the past year. Identify areas of improvement for forward projections for the upcoming planning year.
    • Similarly, review uplift projections vs actuals, including any changes that could impact these factors like new competitors, promotional timing changes, innovation etc.
    • Scenario planning
    • Create scenarios that account for potential shifts in consumer trends and economic changes, such as fluctuations in inflation rates, or shifts in consumer spending power, product availability, weather etc.
    • Include scenarios that address supply chain issues, such as delays in raw material supply or changes in logistics costs.
    • Monitor and plan for changes in competitors’ strategies, such as aggressive pricing, new product introductions, or marketing campaigns.
    • Stay informed about potential regulatory changes that could impact your industry, such as new environmental regulations or trade tariffs.
    • Consider the impact of global events, like political changes or health crises, on your market and business operations.
Determine pricing strategies
    • Competitive analysis
    • Regularly compare your pricing with that of key competitors to understand your position in the market.
    • Evaluate how your products or services stack up against competitors in terms of features and benefits and use this information to justify your pricing strategy.
    • Understand your market share relative to competitors and how pricing influences your market positioning.
Cost-based pricing
    • Regularly review and analyze all costs involved in product development, production, and distribution to ensure your pricing covers these expenses.
    • Set clear profit margin targets and price your products accordingly, while remaining competitive in the market.
    • Look for ways to optimize your supply chain to reduce costs, which can allow for more competitive pricing.
Value-based pricing
    • Conduct market research to understand how customers perceive the value of your products compared to the price.
    • Update your price elasticity models, elasticities have been swinging back and forth since COVID - analyze price elasticity under different market dynamics.
    • Highlight unique features or benefits of your products that justify a higher price point compared to competitors.
    • Do a realistic assessment of the viability of maintaining the current price structure and evaluate if you need to raise, hold or (yes) reduce price.
    • If your brand’s market share is declining due to pricing, evaluate strategies to mitigate - does it make sense to reduce your list, employ EDLC strategies or increase promotions to get your value equation in line?
Analyze assortment for efficiencies
    • Evaluate your assortment, do you have any gaps that are costing you market share? Where are you vulnerable to distribution losses? What are your opportunities to close distribution gaps?
    • If streamlining assortment get ahead of delists and provide key retail customers a substitute so as not to lose the shelf space
    • Evaluate slow-moving items – are they bringing in unique customers or will other products in the line absorb sales if discontinued
    • Are there any items that are a drag on operational efficiency? What is their value to the consumer relative to their higher cost?
Develop promotional strategies and guardrails
    • Promotional mix optimization
    • Assess the effectiveness of various promotional channels and allocate resources to the most effective ones.
    • Analyze which types of promotions most effectively engage your target customer segments.
    • Determine the optimal timing and frequency for promotions, considering factors like seasonality, customer purchase cycles, and market events.
Guardrail framework
    • Set clear annual budget limits for promotional activities to prevent overspending and ensure efficient use of resources.
    • Establish guidelines to maintain brand consistency across all promotional activities, preserving brand identity and values.
ROI-based evaluation
    • Identify key performance indicators for each promotional activity, such as sales increase, customer acquisition, or conversion rates.
    • Use data analytics tools to continuously measure the ROI of promotional activities, comparing them against predefined goals.
    • Align on workflows for approvals outside of set guidelines
Push down targets through hierarchies
    • Customized targets
    • Develop specific targets for different product lines or categories, considering their unique market dynamics and growth potential.
    • Set distinct targets for different geographic regions, acknowledging the variations in market size, competition, and consumer behavior.
    • Align targets with departmental objectives, ensuring that sales, marketing, production, and other functions have clear and relevant goals.
Flexibility for local markets
    • Allow for adjustments in targets to reflect local market conditions, such as economic factors, cultural preferences, differing competitive environments or regulations.
    • Provide a vehicle for sales managers to provide their fact-based knowledge regarding the appropriate targets and budgets.
    • Find the right balance between maintaining standardized corporate goals and allowing customization to meet local needs.
Monitoring and adjustment
    • Implement systems for real-time tracking of progress against targets at all levels of the hierarchy.
    • Schedule regular review meetings to assess revenue target achievement, discuss challenges, and make necessary adjustments.
    • Create a feedback loop where insights from ROI evaluation inform future promotional strategies, allowing for continuous improvement.

Process Management

    • Engage key stakeholders
    • Cross-functional workshops
    • Invite stakeholders from various departments such as sales, marketing, finance department, operations, and R&D to participate in workshops, ensuring a wide range of perspectives.
    • Ensure that each workshop concludes with actionable outcomes, clearly defined next steps, and assigned responsibilities.
Feedback mechanism
    • Implement regular surveys or open forums to gather input from stakeholders on various elements of the annual operating plan (AOP) process.
    • Develop a system to integrate feedback into the annual operating plan (AOP) process, ensuring that stakeholder insights are considered and addressed.
Collaborative decision-making
    • Employ consensus-building techniques in decision-making processes to ensure that different viewpoints are considered and harmonized.
    • Acknowledge and appreciate the contributions of all department heads and individuals involved in the decision-making process, reinforcing a culture of collaboration and mutual respect.
Don’t forget your key customers!
    • Consider reset calendars for key customers relative to your innovation schedule
    • Conduct top to tops with strategic customers and incorporate their feedback into your plans
    • Plan for in-depth review and approval processes
Iterative review cycles
    • Schedule regular intervals (e.g., monthly, or quarterly) to monitor progress of the annual operating plan (AOP). This allows for timely adjustments and refinements.
    • Use these cycles to track progress against milestones and business objectives, ensuring the plan stays on course.
Approval hierarchy
    • Establish clear levels of approval within the organization, ensuring that plans are thoroughly vetted at each stage.
    • Maintain records of approvals at each level for accountability and future reference.
Contingency planning
    • As part of the review process, conduct a risk assessment to identify potential market and operational risks that could impact the plan.
    • Develop alternative strategies and action plans to address scenarios that might arise from identified risks.
    • Ensure that resources are allocated not just for the primary operating plan but also for contingency measures.

Technology and Tools for A Successful Annual Planning Session

Choosing the right software solutions is important when it comes to your business performance and ensuring the success of your annual operating plan (AOP). Incorporating technology into your annual operating plan (AOP) process can significantly improve the efficiency and effectiveness of your planning, laying a strong groundwork for the upcoming year. Platforms like CPGvision by PSignite are important for their efficiency in data analysis and strategic planning. Here is a practical approach to integrating technology into your annual operating plan (AOP) process:

  • Select all-in-one tools: Use software like CPGvision that offers comprehensive features for data analysis, planning, and execution. This type of software streamlines the process and helps in extracting useful insights from complex data.
  • Emphasize data analysis strength: Make sure your chosen tools are strong in data analysis. Being able to accurately interpret data is key to setting achievable targets and creating solid strategies.
  • Planning and execution support: Choose tools that aid not just in planning but also in conducting and tracking your annual operating plan (AOP). This helps in smoothly moving from the planning stage to real-world execution.
  • Foster collaboration: Your solution should enable collaboration while keeping everyone on the same page as to the latest numbers.
  • Team training: Ensure your team is well-trained in using these tools. Organize training sessions if necessary, so everyone can fully utilize the software's capabilities.
  • Integration with current systems: The tools should integrate well with your existing systems to ensure consistent and efficient planning.

Take the First Step Towards Smarter Planning with CPGvision

Make your annual operating plan (AOP) process simpler and more efficient with CPGvision. Our revenue growth management (RGM) suite is tailored for the consumer-packaged goods industry (CPG). With CPGvision, you can set up a strategic plan for a thorough annual operating plan (AOP) in just 8 weeks.

Our annual operating plan (AOP) module simplifies your annual planning process, offering clear and precise financial tools throughout. It includes advanced features for trade promotion management (TPM), trade promotion optimization (TPO), and RGM. At CPGvision, we are committed to your success, providing a comprehensive plan and a dedicated team of experienced CPG professionals to support you.

Are you ready to improve your annual operating plan (AOP) process? Get in touch and learn how CPGvision can transform your own planning process.

Similar posts

The only Revenue Growth
Management solution that
integrates your TPM, TPO,
and RGM functions