At IP Centrum, we’ve never charged urgency fees. We were advised strongly against this when we founded the company, and there was sound wisdom behind the advice. But wisdom isn’t always logical.
IP Service providers are not IP Firms, and in our opinion shouldn’t try to be. IP Firms have a lot more to deal with than we do. The work they do often requires a skilled human being to use their experience, judgement and time to perform actions which result in the desired outcome for their clients.
IP Service providers are different. They have a comparatively narrow and more focused set of functional services, rather than tasks involving opinion and grey areas. This gives the opportunity to orchestrate operational scale.
Operational scaling is hard, however. It requires a tremendous amount of up-front investment and planning, before accepting a single instruction. It is much easier to simply try to follow the model of IP Firms and just provide an economy of scale through centralising instructions. But that doesn’t really add much to the supply chain. It’s essentially just outsourcing.
In the same way that the operating model of a Michelin-star restaurant really shouldn’t be emulated by the supplier who delivers the vegetables, the same is true of the IP service provider – no matter how high quality the vegetables are!.
We think it’s our responsibility to be able to deliver pretty much any volume of vegetables the restaurant needs – within the bounds of minimum safe timescales – without fuss or adding charges. Either you can deliver the service safely within the timescale or you can’t.
What are urgency charges for then?
Maybe some service providers consider them a carrot or stick to encourage earlier instructions. But to what ends, and what is their motivation for receiving earlier instructions?
If it is a noble desire to reduce the risk of late instructions, that essentially means a willingness to accept instructions that you have a lower confidence of completing and charge more for that essentially worse service. If you have lower confidence of success, surely the cost should reduce, rather than increase. So it can’t logically be that.
Is it because the service provider actually has additional costs for late instructions? If so, why? The service provider knows they will receive urgent instructions from time to time – and therefore, at scale ALL the time. This is business as usual. Do they employ more staff suddenly when there is an urgent instruction? Is it to cover the electricity bill due to the office having to open later that day? There really shouldn’t be any additional operational costs. This is something that will happen, and must therefore be planned for. The costs are therefore locked in already as part of the costs of operating the business.
Of course if the instructions are so late that the PoAs need to be delivered by fighter jet, then of course there really are additional costs – and incidentally if there really are unusual additional costs outside of our control due to late instructions, then we will advise our client immediately for approval and charge these on at our cost without margin. But these are extremely rare, and almost always avoidable with a bit of care and effort.
So it starts to look as though the carrot and stick is just about reducing the need for the service provider to be ready for these things, and surcharging those who provide late instructions to pay for that. But this feels like a cop-out to us. In many ways it’s similar to those automated telephone answering systems – “Press 7 to go through to the next layer of menus”. These things are not there to help the customer. They’re to help the supplier at the cost of the customer.
We’re a professional industry; nobody sets out to place instructions as late as possible, and everyone already has motivation to get instructions placed and dealt with as early as they practically can. But there are countless legitimate reasons for late instructions. It’s part of our world.
We’re not an IP Firm, so we get the chance to focus intensely on how to perform the comparatively small number of services we provide to an extreme level of operational efficiency. This means doing it differently, not just providing outsourced staff to do it the same way.
We can either handle your instruction or we can’t, and we believe therefore it’s up to us to make this super efficient and to find ways to allow us to be able to handle your instructions. As an IP services specialist we shouldn’t carrot / stick clients through urgency fees (or even worse, stepped urgency fees) just to make our job easier.