Continuous Improvement

As AEP continues to build on the continuous improvement culture it has been cultivating for several years, our future focus will be the alignment of continuous improvement efforts to high level strategic objectives. This strategy-driven continuous improvement approach is linked to AEP’s strategy and includes three- to five-year objectives for the organization, associated balanced scorecard metrics relevant at every level, and annual project plans associated with meeting goals. The metrics will be vertically aligned and will drive problem solving to the right level within the organization. Also, leaders will continue to develop their skillsets to effectively coach their teams to solve problems, achieve their culture and performance goals, and sustain the continuous improvement culture. AEP will also continue to drive cross-functional value streams aligned with core value drivers.

The foundation for continuous improvement is standard work, and AEP is committed to strengthening our focus on developing standard work for priority business functions and critical processes.

Examples of Success:

One priority value stream is the Fleet Vehicle Acquisition – Vehicle Request to Vehicle Delivery – the process for buying new vehicles. AEP operates over 12,000 vehicles and the processing cycle to replace a vehicle can exceed two years. In March 2017, a cross-functional team from Corporate Procurement, Supply Chain, Fleet Operations and the Supply Chain Center of Excellence created a value stream map to better understand all of the activities that produce this lengthy lead time.

To buy a new fleet vehicle, there are 43 major steps that are performed by 11 organizations. To shorten the lead time to ensure more timely acquisition and delivery of vehicles, 22 improvement opportunities were identified. One of these opportunities is the standardization of vehicle platforms and options by job function. For example, AEP Ohio’s Distribution organization was offering 12 hydraulic vehicle platforms with multiple options to choose from. After the improvement event, eight platforms with standard specifications and minimal options are now offered, resulting in cost and lead time reductions. For example, for one type of digger derrick, the cost savings for the 11 vehicles to be purchased in 2018 is approximately $84,000. In addition, the group reduced the lead time by approximately 24 percent.

As a result of the successes in Ohio, similar improvement events are scheduled for the balance of AEP’s Distribution organizations. To build a continuous improvement culture and use the team’s problem-solving capabilities for future improvements, such as vehicle standardization, the value stream leaders and their teams meet on a regular basis to discuss their progress, challenges and barriers to success.

The foundation for continuous improvement is standard work, and AEP is committed to strengthening our focus on developing standard work for priority business functions and critical processes. In 2017, the Work Planning Process for Distribution developed standard work for the identification and planning of field work, which will be used across our operating companies by the summer of 2018. By developing standard work and applying it across the organization, we can make more informed operational investment decisions, thereby increasing reliability for our customers and allowing best practice sharing.