In 2018, when Julie Ragland became CIO of Navistar, the $10 billion vehicle manufacturing company, her business partners were frustrated with systems because their processes spanned multiple legacy solutions. There was little system continuity across a single process.
As a CIO, the challenge that Ragland faced may sound familiar to you. Your company has a large number of disparate legacy systems and processes that involve multiple functions and departments. Because most business leaders are focused on their own departments, no one is looking after a process end-to-end. Without cross-functional process owners, automation can become an insurmountable problem.
To design a future state of process automation, Ragland had to show her business partners the current state of the IT environment, and why system performance was low.
Establish IT and business ‘matched pairs’
Her first order of business was to establish a well-defined series of “matched pairs” between an IT leader and an executive in each of Navistar’s major functions and business units. “In assigning an IT leader to a business leader, I wanted to create the expectation that these two leaders will be establishing priorities around IT investments together,” she says.
Select your business/IT matched pairs carefully, Ragland advises. “You have to find the business partners who feel the pain and are willing to explore the art of the possible, and the IT leaders who can talk through a process in a way that the business understands,” says Ragland.
Focus on value streams
With her matched pairs engaged, Ragland then introduced a value stream modeling capability that would allow her business partners to understand the current and future state of systems and process automation. “We use the value stream model to represent to the business why they are experiencing frustration with the way the systems work, and that legacy solutions don’t have enough continuity across a process,” says Ragland.
Ragland says that Navistar runs seven major value streams, including source to settle, order to cash, schedule to deliver, and after sales. They also have sub value streams, like hire to retire.
Take, for example, “source to settle” as a value stream. At Navistar, that includes purchasing solutions that are owned by procurement, payable solutions that are owned by finance, and still more purchasing systems that are owned by manufacturing and plant maintenance. “The source to settle process is broken because the decisions for that value stream were made in a lot of different places,” says Ragland. “But we didn’t have anyone accountable for source to settle from end to end.”
Facilitate cross functional operations
Ragland’s shifting the conversation from systems and functions to value streams allows her business partners to see how disconnected functions, processes, and systems no longer work. “When we kicked off the value stream approach, we decided that the SVP of Procurement would own source to settle,” says Ragland. “He can now see that when many different systems are involved in a process, the value stream is broken.”
Now that the SVP of Procurement is accountable for automating an entire value stream, he can articulate his desired future state for that stream, which includes manufacturing, even though he is not in the manufacturing department. With the value stream in hand, he has become a true cross functional executive.
Develop the vision
In addition to encouraging a cross-functional perspective, the value stream concept lets Navistar’s “matched pairs” work together to drive the business forward.
To meet the company’s stated goal of improving the manufacturing value stream and drive up productivity, for example, the SVP of manufacturing and IT leader matched pair work together to develop the vision.
“To achieve our vision, we need a single MRP (material requirements planning), a paperless shop floor, and sensors in the plant stations so that as the truck goes down the manufacturing line, it tells each station what it needs,” Ragland says. “When a truck checks into the chassis bracket station, we have inspection cameras that use machine learning to detect installation flaws. When the truck is out on the road, we use AI and advanced analytics to detect quality issues in the manufacturing process.”
That kind of end-to-end automation is hard to achieve in a siloed organization.
Advice from the trenches
With her value stream and matched pair models in full swing, Ragland offers some advice.
Right size the value stream model. “Value stream professionals would not like what I’m doing because I’m not practicing the true nature of the model,” she says. “Real value stream mapping involves identifying waste, wait time, which activities add value, and which do not, and taking the waste out. I would like to get into all of that, but right now, my goal is to educate the business on why our processes aren’t working.”
Assign accountability. The value stream model won’t work if the business and IT matched pair still think in silos. “You’ve got to make sure your senior leaders understand the difference between value streams and functions and are willing to take ownership of a value stream even when it spans organizational boundaries,” says Ragland.
Use visuals. Ragland finds that a visual representation of a value stream works at multiple levels. “When I show our CEO the value stream visual for ‘schedule to deliver,’ how many ERPs we have, how disconnected the process is, and how far we are from our target state, he gets it,” she says. “He understands that we need continuity in this process.”
Encourage a digital mindset. Value streams transcend functions, systems, and individual processes, and put value – not IT – at the center of every automation conversation. “Value streams are a bridge to talking about IT investments in a way that the business can understand,” says Ragland. “They allow us to measure IT not by how much it costs, but by how it improves the value stream. We are shifting the IT discussion from cost to value.”