Distance to Markets and suppliers. of of scale be distance between a large manufacturing facility and where goods the in question are to be sold or where essential raw materials are purchased. Any reductions in cost attributable to the exploitation of economies of scale manu facturing may be more than offset by large transportation costs associated with moving supplies and products to and from the manufacturing facility. Firms that build highly efficient plants without recognizing these significant transportation costs may put themselves at a competitive disadvantage compared to firms with slightly less efficient plants that are located closer to suppliers and key markets