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WHAT is PuRCHAsing And suPPly sTRATEgy? 157
and one of its customers, one would examine the two dyads of ‘supplier – focal opera-
tion’ and ‘focal operation – customer’ (see Figure 5.3(a)). For many years, most discus-
sion (and research) on supply networks was based on dyadic relationships. This is not
surprising as all relationships in a network are based on the simple dyad. However, more
recently, and certainly when examining service supply networks, many authorities
make the point that dyads do not reflect the real essence of a supply network. Rather,
they say, it is triads, not dyads, that are the basic elements of a supply network (see
Figure 5.3(b)). No matter how complex a network, it can be broken down into a col-
lection of triadic interactions. The idea of triads is especially relevant in service supply
networks. Operations are increasingly outsourcing the delivery of some aspects of their
service to specialist providers, who deal directly with customers on behalf of the focal
(more usually called the ‘buying operation’, or just ‘buyer’ in this context). For exam-
ple, Figure 5.3(b) illustrates the common example of an airline contracting a specialist
baggage handling company to provide services to its customers on its behalf. Similarly,
internal services are increasingly outsourced to form internal triadic relationships. For
example, if a company outsources its IT operations, it is forming a triad between who-
ever is purchasing the service on behalf of the company, the IT service provider and the
employees who use the IT services.
Thinking about supply networks as a collection of triads rather than dyads is stra-
tegically important. First, it emphasises the dependence that organisations are plac-
ing on their suppliers’ performance when they outsource service delivery. A supplier’s
service performance makes up an important part of how the buyer’s performance is
viewed. Second, the control that the buyer of the service has over service delivery to its

Figure 5.3 (a) dyadic relationships in a simple supply network and example (b) Triadic
relationship and example

Focal
Dyadic Dyadic operation/
interaction interaction buyer
Focal
Supplier Customer Triadic
operation interaction
Supplier Customer

Dyadic Dyadic
interaction interaction Airline
Electric Washing
motor machine
manufacturer maker Retailer Triadic
interaction
Baggage
handling Passengers
agent

(a) (b)

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