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158 CHAPTER 5 • PuRCHAsing And suPPly sTRATEgy
customer is diminished in a triadic relationship. In a conventional supply chain, with a
series of dyadic relationships, there is the opportunity to intervene before the customer
receives the product or service. However, products, or services in triadic relationships
bypass the buying organisation and go directly from provider to customer. Third, and
partially as a consequence of the previous point, in triadic relationships the direct link
between service provider and customer can result in power gradually transferring over
time from the buying organisation to the supplier that provides the service. Fourth, it
becomes increasingly difficult for the buying organisation to understand what is hap-
pening between the supplier and customer at a day-to-day level. It may not even be in
the supplier’s interests to be totally honest in giving performance feedback to the buyer.
Finally, this closeness between supplier and customer, if it excludes the buyer, could
prevent the buyer from building important knowledge. For example, suppose a spe-
cialist equipment manufacturer has outsourced the maintenance of its equipment to a
specialist provider of maintenance services. The ability of the equipment manufacturer
to understand how its customers are using the equipment, how the equipment was
performing under various conditions, how customers would like to see the equipment
improved and so on, is impaired. The equipment manufacturer may have outsourced
the cost and trouble of providing maintenance services, but it has also outsourced the
benefits and learning that come from direct interaction with customers.

Example using supply strategy to change the economics of space exploration 1
You don’t think of space satellites as cheap items; and of course they aren’t. They can be
expensive – very expensive. And in the early days of space missions, this meant that only super-
powers could afford to develop and launch them. The conventional wisdom was that space was
such a hostile environment that satellites would have to be constructed using only specially
developed components that could endure the severe conditions encountered in space. Satellites
therefore would always be expensive items. Yet, in the late 1970s this assumption was challenged
by Sir Martin Sweeting, who then was studying for his PhD at the University of Surrey in the
UK. The aerospace research team in the Electrical Engineering Department at the University of
Surrey had built its first satellite (called UoSAT-1) by purchasing commercial off-the-shelf com-
ponents. It was about as big as two microwave ovens, weighing in at 72 kg. By contrast, some
of the huge satellites being launched by government space agencies were as large as a London
double-decker bus. It was launched in 1981 with the help of NASA that had been persuaded to
provide a free launch, piggybacking on the back of a mission to put a large scientific satellite
into orbit. The team followed this up with a second satellite (UoSAT-2) that they built in just
six months and launched in 1984. A year later Surrey Satellite Technology Limited (SSTL) was
formed as a spinout company from the University of Surrey to transfer the results of its research
into a commercial enterprise. The firm’s vision was to open up the market for space exploration
by pioneering the use of small and relatively cheap, but reliable, satellites built from readily
available off-the-shelf components – then a revolutionary idea. Now SSLT is the world’s lead-
ing small satellite company, that has delivered space missions for a whole range of applications
including Earth observation, science, communications and in-orbit technology demonstration.
The company is at the forefront of space innovation, exploiting advances in technologies and
challenging conventions to bring affordable space exploration to international customers. The
company, which has launched over 40 satellites, is based across four sites in South East England,
and employs more than 500 staff. Since 2014 SSTL has been an independent company within
the Airbus Defence and space group.

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