We work with our suppliers at the local, regional and national levels to drive continuous improvement and efficiencies within the supply chain while improving environmental and safety performance.
Learn About Supplier Diversity
AEP buys billions of dollars in goods and services every year, ranging from chemical solvents and office supplies to vehicles and industrial equipment from national, regional and local suppliers. As a large company, we are able to manage costs by negotiating prices, being strategic about sourcing and managing inventory. By applying a procurement category management model, we are able to look at the whole value chain from sourcing through inventory.
We continue to improve efficiency through strategic sourcing - optimizing what we buy and how we buy it. Our procurement team is getting involved earlier in the purchasing process and standardizing the process by educating employees on best procurement practices.
We continue to leverage technology through e-commerce solutions, software and tool consolidation and standardization, which includes exploring robotic process automation.
Protecting the bulk electric system includes extending cyber security protections to the supply chain. AEP has developed a third-party risk governance program to identify potential risks introduced through third-party vendors. And, in January 2018, the Federal Energy Regulatory Commission (FERC) proposed approving new mandatory Reliability Standards to mitigate cyber security risks associated with the supply chain products connected to grid-related cyber systems.
Sustainability in the Supply Chain
We have seen an increased interest from our supply chain in our Environmental, Social and Governance (ESG) performance. In 2018, AEP conducted an online sustainability assessment of our company, at the request of two of our largest customers. We attempt to be responsive whenever possible while also being mindful of the value-add for completing these assessments, as these assessments require significant effort, including time and resources. We also try to be transparent in our performance reporting through our annual Corporate Accountability Report as well as through other surveys, such as the CDP and our Global Reporting Initiative (GRI) Report.
We respond annually to the CDP’s Supply Chain Survey. This survey aims to drive action on climate change among both purchasing companies and their suppliers. The survey provides us with a different platform for being transparent about our sustainable supply chain efforts and collects business-related climate change information from our suppliers.