At inVentiv Health, Inc., a respect for and focus on fleet management goes all the way to the top of the organization. In an interview with Fleet Financials, three key inVentiv executives discuss the company's approach to fleet.

is the chief operating officer of inVentiv Health, Inc., the corporate parent, and president and chief executive officer of inVentiv Commercial, the operating unit in which most fleet activity occurs. Herring joined the company in November 1999.

is chief financial officer of inVentiv Health, Inc. and has been with inVentiv for 10 years.

is fleet and travel manager for inVentiv Commercial. He is responsible for the management of the fleet, as well as travel supplier management and has been with inventive since 2001. A 20-year fleet veteran, Dudek is also past chair of the New Jersey chapter of the National Association of Fleet Administrators (NAFA). FF: inVentiv has an interesting business model. Tell us about the company.
Bassin: inVentiv Health, Inc. has four primary business segments: inVentiv Clinical, inVentiv Communications, inventive Commercial, and inVentiv Patient Outcomes. Overall, we have 5,500 employees nationwide, and operate in all 50 states, the UK, France, and Canada. Herring: The company began with a core business of providing what is essentially a turnkey, contracted sales force solution to our customers in the pharmaceutical industry. We've since grown and expanded our product offerings to include a number of new services. When I became president in 2002, we had divested ourselves of nonperforming businesses and developed a two-stage growth plan. inVentiv had been previously known primarily for its pharmaceutical contract sales team business, known as CSO. We recognized there were a myriad of opportunities to diversify that business model to include a full menu of services that could be purchased independently or as part of a comprehensive client solution. The second stage of that growth plan was to acquire new services to provide a more comprehensive portfolio to our clients to help them achieve their business objectives. FF: inVentiv has moved beyond the 'contracted sales team' core product?
Herring: Yes, in a big way. We've now created a complete menu of best-in-class services spanning the clinical development phase through post-launch management of pharmaceutical brands. Clients can engage us for integrated solutions to meet their needs across the entire lifecycle of their brands. We have organized our companies into four centers that work together seamlessly to deliver services to our clients. Now we can be with our customers from start to finish, not just for the sales promotion piece. FF: Dave, how does fleet management fit into this business model?
Bassin: Providing company vehicles unfortunately is viewed in many companies as a 'necessary evil,' something that they feel compelled to do even though they’re not fond of the idea. We believe fleet is part and parcel of what we do, and an important piece of our overall business strategy. Herring: I couldn't agree more. A fleet can be managed reluctantly, thus poorly, or it can be viewed and managed as an asset, not just an expense. Fleet helps us attract talent, from sales representatives to executives, and retain them. It's a competitive labor market out there, and we must provide an attractive compensation package. inVentiv believes that a company vehicle helps make it so. FF: It sounds as though inventive believes its in-house fleet management function is important as well. Bassin: inVentiv has a unique fleet operation and managing it demands professional, in-house attention, which Warren provides. Our vehicles are tied to the contracts we have with customers.

When we sign a sales team contract, it often requires us to bring large numbers of vehicles into service at once and at the end of a contract bring them out of service. Managing inventory is far more important to us than in many other fleets. In addition, by managing our fleet inventory effectively, we can be more efficient than in-house fleet departments and minimize the exposure created upon the reduction of a sales force. Herring: Before Warren was brought on board, fleet was viewed more as a tactic than a strategy. That limited the benefit we believed company vehicles brought to the company and to our customers. Now it is an integral part of our overall business strategy, and we give it the appropriate attention. FF: Does that mean fleet isn't simply dead cost?
Herring: Absolutely. The benefit a company car brings is huge, and if we don't recognize this, we can't maximize it. FF: Warren, what is unique about the inVentiv fleet? Dudek: Well, the basics of what we do here are pretty much the same as in other fleets. We work to provide the right car and operate it in the safest, most cost-efficient manner possible. It is the purpose of the fleet that is different, as Dave pointed out earlier. Most companies provide their employees a vehicle to facilitate the sale of their products and services, to service accounts, or as a form of compensation. We do as well. However, the driver, though he or she may be paid by inVentiv, works on behalf of our customer. FF: How so?
Dudek: When a pharmaceutical company receives approval to market a new drug, they often deploy a sales force to do so. This entails their having to recruit, hire, train, and pay dozens, often hundreds, of new representatives, an expensive and time-consuming process.

Our contracts provide for all these services, so we do the work for them, including providing company cars. That is the 'turnkey contracted sales force solution' that Terry referred to previously. So we may, for example, contract to provide 100 sales reps, which in turn requires 100 company provided cars to drive, all at once. FF: Can you describe that process?
Dudek: An initial operational meeting is set up six to eight weeks in advance of new business, to review the client's contracts in the following key areas:

• Fleet.
  

• Human Resources.
  

• Recruiting.
  

• Call reporting and sampling.
  

• Electronic data management (EDM).
  

• Finance.
  

• Training.
  

  The group meets weekly thereafter, reviewing and updating issues related to this new business, focusing on the client's requirements. Fleet places new-car orders with the fleet lessor, typically six weeks prior to launch, once all specific territories are established for this business. We provide order numbers and dealer codes to new-car manufacturers to align production and delivery to the contract launch.

  Finally, we provide rosters of all new hires to the fleet management company two weeks prior to launch. They align vehicles previously ordered to territories and specific individuals. They begin the process of updating the database and create new-car paperwork to enable dealers to license and title the vehicles so they are ready to go when the new hires pick up their vehicles. FF: That fleet operation is different, and it sounds complex.
  Dudek: Yes and no. It is very different than a situation where the company is hiring their own reps and vehicles are on a regular replacement cycle. It is, I suppose, more complex. However, we've worked out a very detailed process to keep track of it all, so it is not as difficult as it could be. Bassin: The uniqueness of our fleet drives our fleet management activities. It results in developing high quality relationships with our customers in the most cost-conscious manner possible. FF: Dave, how does fleet fit into your overall responsibilities? Bassin: As CFO,my overall responsibilities cover all cost-related matters in thecompany — tracking, managing, and allocating them — as well as our banking relationships and needs. This includes all our strategic partnerships, which, of course, includes those in which we enter to provide company vehicles. In addition, fleet is a significant expense and a large financial commitment, and it's important that we manage it well. I'm responsible for the balance sheet, and we need to make informed decisions as to how our vehicle leases are managed. FF: How do you book fleet leases? Bassin: We book them as capital leases. FAS 13 has four tests to determine whether leases are capital or operating leases, and we meet at least one of the criteria resulting in our capital lease treatment. FF: Has the inVentiv fleet grown over the past several years? Dudek: Yes it has, and managing that growth is one of the real challenges I have. We're now at more than 2,700 vehicles with more than 30 clients. I deal with a number of fleet management companies, sometimes as many as five, and that in itself is a challenge. FF: Why so many lessors?
  Dudek: If "Company A" is using a particular lessor for its company vehicles, we try to comply with that relationship and order the vehicles under our contract accordingly. We do this because there is always a probability that the representative will become employed by the client and the vehicle transferred by an assignment and assumption agreement. Bassin: We have the top 20 pharmaceutical companies among our client base, as well as small- and mid-sized pharmaceutical and biotech clients, and we work hard to meet their individual needs. FF: Warren, you've described how the inVentiv fleet is unique. Can you expand on your primary responsibilities in managing it? Dudek: My primary duties, from a strategic standpoint, are in the area of supplier management. I'm responsible for the fleet and travel supplier relationships, all contractual agreements with these suppliers, and managing our relationships with all customers, both internal and external.

  I've developed and continue to maintain all fleet and travel policy documents and directly manage our fleet, of which total capitalized cost is approximately $30 million. I'm responsible for process improvements, including recommendations for cost savings or cost avoidance initiatives.

  As with most managers, I have staff for which I am responsible, and I work hard to motivate and provide professional development for them all. FF: How do you measure success? How do you track the department's progress in meeting your clients' expectations? Dudek: We’ve developed a series of metrics that we track regularly:
  

• Data and analysis.
  

• Exception reporting.
  

• Resale performance tracking.
  

• Current inventory.
  

• Call response time.
  

• E-mail response time.
  

• First call resolution.
  FF: It sounds as if the inVentiv fleet operation has undergone some changes over the years.
  Herring: Without question. Warren has provided a high level of professionalism during his tenure. We've grown dramatically in a short period of time, and fleet expense could easily have gotten out of control. Warren keeps a firm hand on that expense, and we're fortunate to have him on board. Fleet is a very large expense, and we need to respect it. Bassin: More than in other fleets, managing inventory and utilization is absolutely critical at inVentiv. We have a significant number of vehicles coming in and out of our fleet all the time, and if we don't manage that process, costs could easily get away from us. Having an in-house fleet function enables us to maintain tight control on those costs. FF: Having the full support at the highest levels of responsibility in the company must help.
  Dudek: Without question, that is the key to successful fleet management. Both Dave and Terry said it well. Many companies tend to view fleet vehicles as a necessary cost, one for which it seems they're constantly looking for ways to be more efficient. I'm in a situation where the COO and CFO both believe what I do is not only important, but an asset to the company's strategic vision. I couldn't ask for better support or a better fleet team. Bassin: Put simply, fleet vehicles are a major reason for our success, and recognizing that is easy. Warren has done a great job. Herring: We need fleet vehicles to do the job for our customers; it's that simple. If we provided them grudgingly, if we were unenthusiastic in doing so, we could hardly do it well. We see fleet as value, not as cost, and if we manage our vehicles professionally and efficiently, we can maximize that value. Warren enables us to do that, and he has our full support.