How Levi’s stitched AI into its iconic jeans

Chip Bergh remembers the first pair of Levi’s jeans he bought before that make-or-break first day of middle school. Owning and wearing those jeans—making a good first impression among classmates—was so important to him that, when he could not find the brand in any local store, he asked his mother to drive him to a neighboring town to purchase the jeans. “This is a brand that, when I was a kid, was gold,” he reflected to us.

Several years later while serving in the United States Army, Bergh saw firsthand how valuable his Levi’s were, and not just to him. Traveling through the Nordic countries, he was staying at a youth hostel and woke up to find his cherished jeans were missing from his bags. What’s more, the young thieves had run away with the jeans but left his wallet behind! Bergh laughs, “Levi’s was money.” 

Despite his lifelong connection to the brand, Bergh never expected to work at Levi Strauss & Co., let alone become the company’s CEO, a role he took on in September 2011, 158 years after the company was founded. “The words out of my mouth were, ‘Oh wow.’” Bergh recalls. But the iconic brand was struggling much more than he realized. “If you’d put a gun to my head at that moment in time and asked me how big did I think Levi’s was, I would have said ‘$10 billion in sales.’ They were about $4.2 or $4.3 billion.” In addition, the brand’s average consumer at the time was a 47-year-old male, not the younger demographic that many retailers desire. 

Revitalizing the brand—re-establishing the ‘cool factor’ that Bergh recognized as a child and young adult—was essential. But where and how to begin? 

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In his first six months as Levi’s CEO, Bergh outlined and kicked off a plan with four core objectives designed to anchor the company’s innovation efforts: 

• Strengthening its top-selling products (men’s jeans and khakis) as well as its most profitable relationships with customers like Kohl’s and Macy’s.
• Expanding market share in lower-profit areas, both product-based (e.g., women’s tops) and geographical (e.g., emerging markets in Brazil and China).
• Invigorating Levi’s own branded stores and boosting direct-to- consumer sales through its e-commerce website.
• Improving the company’s economics and data/technology usage.

“Most often when you talk about innovation, people immediately go to product—thinking it’s about product—but it can be anything,” Bergh says. “It can be business process; it can be how you think about talent development; it really is not limited to products.” 

Many new jeans on the market are coveted for looking five, ten, or even twenty years old. Consumers will pay a premium for fraying patches, holes in the knees, or distressed washes, looks that are created with chemicals and time-intensive hand finishing. The amount of water used in those processes, as well as a chemical called potassium permanganate (PPEP), is environmentally unfriendly. Bergh had discovered another concrete goal for his team: Find a more environmentally sustainable way to produce a pair of jeans. More specifically: reduce the pollutant chemicals used in manufacturing jeans by 25%. Bergh’s goal was not just about winning brownie points from sustainability-conscious consumers. The process of creating distressed jeans in a less environmentally destructive way was not obvious, and would push his team to consider new technologies, new supply chains, and new manufacturing techniques that could drive down production costs and open the door for future innovations.

Levi’s engineers went to work. Spurred by books such as Stephen Leahy’s 2014 bestseller Your Water Footprint, which laid out how producing one pair of jeans takes 2,000 gallons of water, Levi’s devised water systems for its factories that were completely recyclable. Eventually they discovered that the hand-finishing process could be accomplished with a laser—requiring only a dozen or so chemicals instead of the thousands typically used in denim factories. They called the new process FLX, for Future Lot Execution.

FLX was a game-changer for Levi’s sustainability commitment. But its impact on the company extended beyond that, to business model innovation. By using computer software to control lasers to burn replicable patterns and other finishes onto the jeans, Levi’s could now respond to changing jean trends faster than before, turning out new styles in a matter of days instead of months. Instead of needing to stock warehouses with jeans of every single finish, the company now can house “blanks,” which are used to create an endless number of finishes. This means that only two pairs of Levi’s—one pair of pants and one pair of shorts—can be the basis for more than twenty products, all with different colors and different finishes. Consumers could even design their own jeans on an iPad or computer at home. “We’re becoming a software company,” Bergh remarked, “including software to drive the laser to deliver a perfectly finished pair of jeans.” For a recent season, 15-20% of Levi’s products utilized this new laser technology. 

And FLX is just the first step in an ongoing plan for digitalizing the jeans-making process, according to Bergh. “We catalog everything we do, and we can use AI to determine where the puck is going… We know how many items are going out the door with a ripped knee, and we can track different characteristics of every pair of jeans that we produce and see what’s happening to it from a commercial standpoint. Over time, we’ll be able to predict where trends are going using artificial intelligence.”