The name Ryder means one thing to a lot of consumers and business owners -- it's the company you call when you went to lease or to rent a truck. However, that's just one part of Ryder System, Inc.'s business, based in Miami, Florida. With yearly revenues of more than $5 billion, this global organization ranks as the leader in providing outsource services for supply chain management.
IT has played a major role in helping Ryder distinguish its fleet operations -- consisting of about 125,000 vehicles and about 40,000 trailers -- from its competitors. In fact, in 2007, Kevin Bott, CIO and senior vice president of Ryder, made Computerworld's list of Premier 100 honorees. Bott demonstrated his leadership skills when RydeSmart, a pilot project to improve fleet operations, took off in the wrong direction. As a member of Ryder's senior management team, Bott makes sure his IT team spearheads projects that help improve the Ryder customer experience, as well as to enhance the company's internal operations.
Enterpriseleadership.org recently sat down with Kevin Bott to discuss some of the CIO challenges he faces. Here's what he had to say:
EL: Can describe the structure of your IT organization?
KB: My team consists of mostly employees and some contractors. They all support operations in seven countries, including the U.S. Mexico, China, and Argentina. Our contractors in India do development work for us. Contractors in the U.S. work as capacity buffers for large projects as we need more resources. My annual IT budget ranges between $70 million to $80 million.
All of the IT resources report to me. Two major IT teams support the supply chain, the outsourcing group, and the fleet management solutions, which is leasing and rental. A central support team handles our back office functions, such as human resources and finance. I have an infrastructure team. Each team has specialists in different areas, such as telecom, or certain applications.
EL: Why did the RydeSmart wireless fleet project go off track?
KB: The project took longer to deploy, resulting in the delay. We had to take the time to put the technology on the older vehicles. For new vehicles, we had the technology installed at the OEM site. We already had all of these vehicles in our shop or with our customers. Our customers run and manage these vehicles. We maintain them when the customer brings them into our shop.
First, we had to schedule our customers to bring in the vehicles so we could install the technology. We had about 225 shops and 5,000 vehicles in the pilot. Personnel in each one of us shops needed training on the technology. Sometimes we wouldn't see the vehicles for six weeks or eight weeks.
Furthermore, we run into some technical issues, too. For example, the on-vehicle communication bus connects to the electronic communications module (ECM) in order to talk with various computers located throughout the vehicle. This communication enables us to obtain the information we transmit about what the vehicle is doing. We have about 60 different makes of vehicles of all different ages. These vehicles range from brand new to seven years old. The industry needs to standardize the communications bus on the ECM. Working through the technical issues with all of the different vehicle models took more time than we anticipated.
EL: According to Computerworld, you refused 'to let the effort become too corporate and to concentrate on tangible savings' How did you work with senior leadership and the business units to make this happen?
KB: I had luck on my side here. My core leadership team consists of two members of the fleet management solutions group, namely the division chief operating officer and the executive vice president for sales and marketing. We all met frequently. I had their support all along. We were able to overcome obstacles. They came up and pushed things through. When you have senior management support, it makes any type of project go easier.
EL: How does IT align with the corporate strategy and with the strategies of business units? Can you briefly describe all organization levels of your IT governance model?
KB: The governance for the fleet management solutions group, the supply chain and sourcing group, and the central support group consists of a business steering team. We meet a couple of times a year to go over all the major projects we want to work on in the upcoming year.
We also have an overall corporate IT strategy team, comprised of the company's leadership team. After the three sub-teams have come up with their project list, then the corporate team comes back and approves the list. We set a capital plan for IT investment at the end of each fiscal year. We treat that as a portfolio throughout the year. We do projects on the list as they come up. They can change after that. If something bubbles up that takes a higher priority, we bump something off that list throughout the year. We continue to work on the list from a project standpoint.
Each one of my direct reports meets with his/her business leadership either weekly or monthly. They review all of the short-term projects. We, unfortunately, work from a backlog. The business team helps us to prioritize all of the projects and all of the work we're doing. We give IT funds back to those business teams. To this end, they have an inherent interest to make sure we spend their money wisely. This cooperative and collaborative initiative tasks us to make sure we're doing what the business units want us to do, but we're making recommendations about what we think we need to get done.
That's the main core of the governance. Each major scale project has a steering committee that meets once a month to review the status of the project. We also do weekly reporting on the major projects that go up through the organization.
EL: Are you using anything like the Balanced Scorecard to measure the effectiveness of projects?
KB: We have four different Balanced Scorecard criteria, including on time, on budget, within scope, and achievable benefits. Projects on budget rank higher than the projects done on time. The business units have their own project scoring system for large project deployment.
EL: Besides the Balanced Scorecard, what other quality practices are you using in IT?
KB: Ryder has been using Lean, Six Sigma and ISO for several years. All of my supply chain management people have gone through the initial Six Sigma training. I have one person working on a Black Belt. We have various ways to use Six Sigma. We're doing a very large scorecard project for a subgroup within the supply chain, which is dedicated contract carriage. It's a process control type tracking system. Anyone in management can view the different performance indicators. We're rolling it out for 2008.
EL: How did your predecessor mentor you, and how are you mentoring your direct reports?
KB: Robert Sanchez, the former CIO, is now the chief financial officer. I see him frequently because I report to him now. When I didn't report to him, I'd still seek out his advice if I wasn't sure how to handle something. It worked out very well. I don't know if I was a pain to him or not. He helped acclimate me to my role as CIO. He's a very calm and very logical person. He's easy to run things by.
For my staff, I'm working with our human resources group. We're having people work on 360-degree self-assessments. We're also doing succession planning. I have regular communications meetings with the staff. Twice a year, I hold a state of the union meeting with the entire global IT organization. We try to keep the communications channels open.
We had higher turnover this year than we experienced in the past. As a result, we did a lot of detailed review of what was doing on there. We got some good feedback from the interviews we did. We try to react to what we hear. We're trying to be more proactive as we can with these issues.
South Florida right now has a tight job market for people in IT. Every six weeks, I meet informally with other CIOs to talk about different things. Finding qualified people and keeping good people rank high on everyone's list of priorities.
EL: You have a doctorate in operations and management. Why did you decide to get into IT?
KB: I majored in production operations management and minored in. Together, they translate to supply chain management. Logistic always interested me. In fact, after I gave up being an assistant professor at Case Western Reserve University, I went to work in operations research applied mathematics area. I work with a lot of technology to develop different tools to help with logistics. I've always sat on a three-legged stool with a lot of interaction with the business, a lot of interaction with technology, and a lot of interaction with the operations research side. Now I'm on the IT side. It has been interesting.
EL: What is Ryder's process for driving sustainable innovation to keep the company more competitive?
KB: Each quarter, the leadership team meets off site to discuss the development and the execution of the annual strategic plan. As a company, we push for sustainable profitable growth in the market place. We look for new ways we can make it easier for customers to do business with Ryder. We also look at how we can use technology to increase the efficiency and the effectiveness of our operations. RydeSmart is an example of a technology innovation. My team has the task of helping business with things that meet any one of these strategies. We create tools to help the business work more successfully with our customers. For example, about 3,000 or 4,000 of our customers have daily access to all of the things we do for them, such as their shipping history. We leveraging this technology to make our customers feel better about Ryder and make them be more successful. That's what they're hiring us for!
EL: How far along are you with deploying RFID?
KB: We've had RFID in our supply chain for several years. Once it's set up, it works fine. Some of the original mandates for RFID, however, added cost to the supply chain. Putting RFID chips at the originating point rather than at our proposed middle of the supply chain reduced this cost.
It hasn't grown as fast as everyone said it would. You have the Wal-Mart RFID initiatives and the military RFID. Other than use by retailers, RFID hasn't grown wildly. People still search for ways to use it.
This technology will eventually take off. There are many uses for it. For example, our badges to get into the building have RFID. Your garage door openers are an RFID device. All of the toll roads have RFID. The cost keeps coming down. You'll eventually see RFID in wireless appliances.
EL: What new technologies do you have planned for 2008?
KB: We're rolling out a major operating system for the supply chain division. The new centralized platform will us more benefit than our distributed platform. This project will affect about 600 operating locations in North America. It will also change our operating processes. We're connecting this new system to RydeSmart program, as well as to our financials for billing and payroll.
Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.
