The out-of-form Raval was a disaster in the first test in Perth, as Australia won the opening encounter by a mammoth margin.
The action shifts to Melbourne next week, for the Boxing Day test, and McMillan says Tom Blundell must replace Raval, while finger spinner Mitchell Santner should also be axed.
"It's pretty obvious, the opening batting conundrum at the top and the spinner, they're the two who have to be sorted and changes have to be made," McMillan told Radio Sport Breakfast.
"You drop him because playing him again would be cruel. It would actually be silly. Tom Blundell is the batting cover okay. He's covering positions one to six.
"In an ideal world when you are touring Australia you like to have a reserve opening batsman. New Zealand haven't done that and probably don't have many options in terms of that at the moment.
"Will Young is out injured and not playing. He would have been the obvious person to fill that gap.
"Tom Blundell has the skill set that can succeed at the top. He plays fast bowling well; he's a good back foot player.
"The question for me is would you lose anything by playing him in this next test match? The answer to that is a very simple no so he has to play.
"And the great thing about Tom Blundell is he would be expecting to play and he would want that opportunity to play in the Boxing Day test.
"He has all the qualities you want. He actually prefers facing bowling the quicker it gets.
"He has a great back foot game, plays horizontal bat shots so he has the skill set to deal with the Australian bowlers."
McMillan said in an ideal world, Blundell - whose two tests were as a wicketkeeper - would not be opening but a pragmatic selection change could bring a big gain.
"It might be a stop gap for two test matches but it's an opportunity for someone else and you never know what might happen," said former test batsman McMillan.
Former test batsman McMillan said Raval should still be dropped even if he scored a lot of runs in the two day game before the second test.
"If Raval goes out and score runs against a very weak Victorian opposition it doesn't change anything for me," he said.
"I would give an opportunity to Blundell in that game and then play him in the final two test matches.
"A straight swap – you can't be changing two or three other positions. Yes, they missed out in that first test but their records over a period of time at numbers four, five six have been so good."
McMillan said New Zealand had quality red ball spinners, naming leggie Todd Astle and the orthodox left armer Ajaz Patel.
Astle had over 330 first class wickets including 13 five and two ten wicket hauls. Patel had 233 first class wickets, with 18 five wicket bags and three 10 wicket hauls.
"And we're picking a guy whose best is three for 20. You work that out," he said of Santner.
"Mitch did well, he scored that 100, got three-for against England, but at number eight your job has to be taking wickets.
"(Australian spinner) Nathan Lyon took six wickets in that (Perth) test match. It took a lot of pressure off (Mitchell) Starc and (Pat) Cummins.
"We need to take some pressure off Neil Wagner and Tim Southee who were outstanding after we lost Lockie Ferguson.
"The spinner has to be able to pick up three, four, five wickets."
