TRIAS: Decision on Cable Ladder Production

In July 2015, PT Trias Indra Saputra (TRIAS), Indonesia’s leading welded cable ladder producer, had just won its largest-ever tender bid. The news could get even better if it adopted alternative materials that were potentially more profitable. The production director was tasked with weighing whether TRIAS should fulfill the tender using its traditional supplier or the new materials. While more expensive, the new materials would cut out several production processes and associated costs. However, using the new suppliers presented significant risks. Only two mills, in Korea and Japan, supplied the appropriate material, and both companies presented different prices and import costs. Since TRIAS could be penalized if it did not supply the goods on time, the production manager also had to calculate the likelihood that each company could be delayed in supplying the order and how much that would reduce profits if it happened.