As this happens,
logistics takes on increased importance within the firm since its costs, especially transportation, become a larger part of the total cost structure. For example, if a firm seeks foreign suppliers for the raw materials that make up its final product or foreign locations to build its product, the motivation is to increase profit. Material and labor costs may be reduced, but logistics costs are likely to increase due to increased transportation and inventory costs. The “tradeoff”, as shown in Figure 1-6, may lead to higher profit by reducing materials, labour, and overhead costs at the expense of logistics costs
and tariffs. “Outsourcing” adds value, but it requires careful management of logistics costs and product-flow times in the supply channel.