- Opinion & Analysis
- Read Time: 7 min
Since the mid-1990s, many companies have outsourced or offshored their manufacturing operations. For most, one crucial enabling factor was cheap oil: Long supply lines were economically feasible because transportation costs were relatively low. Hence, companies emphasized reducing manufacturing costs through (1) offshoring or outsourcing; (2) plant rationalization; and (3) consolidating distribution centers and warehouses to reduce inventory levels and minimize fixed facility costs.