Due to global supply chain issues, you have probably been told multiple times to finish your Christmas gift ordering early this year. The state of the global supply chain remains in focus for both Wall Street and lawmakers in Washington, DC. But what is causing the slowdown? Two main causes are JIT and traffic jams.

Back in the 1980s, manufacturing companies adopted an approach called “just-in-time” inventory management. Just-in-time (“JIT”) calls for the necessary raw materials or parts to be delivered to the factory just before production must begin to fulfill orders on time. By reducing the amount of excess material on hand, companies can reduce waste, control costs, and better forecast revenue.

The Toyota Motor Company pioneered JIT in the 1970s. The company’s success led to the rapid spread of JIT principles to industries worldwide. It helped create the deeply interconnected global supply chain we have today.

Now, JIT works great if supply-chain disruptions are minimal. Because the company has to supply customers with what they want, when they want it, and spend as little money as possible to make it happen, any disruption to the supply chain can quickly lead to negative downstream effects. For example, in 1997, a catastrophic fire at one of Toyota’s auto-parts suppliers forced the company to stop production across the supply chain, costing the company billions in revenue.

The lockdowns used to control the coronavirus pandemic forced companies to shut their doors, some of them forever. As the pandemic eases, the surviving companies across the supply chain need to resume operations. That can mean tackling a list of logistical issues like rehiring workers, renegotiating contracts, and locating new supplier or purchaser relationships – alongside actually manufacturing and shipping an item.

Even if suppliers manage to overcome these challenges and ship goods in from overseas, timely delivery to consumers is still not guaranteed. Record demand for imported goods following the easing of some COVID restrictions in mid-2020, coupled with shortages of dock workers and truckers has resulted in unprecedented back-ups at the two most typically popular ports of Los Angeles and Long Beach.

Some large companies, such as Target Corp. and Home Depot Inc,. are taking matters into their own hands, chartering ships to deliver their goods to other, less busy, ports. While this costs significantly more than leasing only the amount of space needed on a cargo ship which is managed by a broker, companies that can afford to do so can significantly speed up delivery of their products.

As long as the world runs on time, JIT can leverage a highly interconnected supply chain to deliver what you want when you want it for a reasonable cost. The pandemic disrupted supply chains worldwide, forcing companies to play catch-up. As the economy continues to recover, labor shortages will likely shrink, enabling ports to reduce backlogs of cargo ships. Taking all this into account, experts now expect supply-chain issues to persist through 2022.