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Levi’s Proves Automation in Denim Manufacturing Could Substantially Speed Up Supply Chains

Automation may still sound like a “nice to have” for companies not yet invested, but leaders in the space have already made a case for the speed to market improvements it could afford.

Levi Strauss & Co. is one of them.

The denim purveyor has patent protection for an automated laser solution for finishing its jeans that shortens the process from 20 minutes to 90 seconds.

“The contrast between the previous finishing process and the new one is a striking illustration of the potential of automation,” McKinsey & Company said in a report unveiled at the Sourcing Journal Summit in New York City this month.

Prior to automation, the manual process for distressing a pair of jeans for Levi’s modeled after a designer sample required a factory worker to apply chemicals to the jeans, use sandpaper to distress them and introduce the holes and tears indicative of designer duds.

“This laborious, inexact process typically takes 20 to 30 minutes per pair,” the report noted.

With the automation technology, the factory worker is removed from the process; a Levi’s designer creates a digital image of the distressed jeans with instructions the laser technology can understand, and the lasers can then replicate every element of the design—from fades to tears—onto a basic pair of jeans. And finishing that process takes just 90 seconds.

“The technology allows the company to produce unfinished jeans in Asia, then send them to nearshore countries for finishing,” McKinsey said. “This means that the company can test many different styles, quickly reproduce the best sellers, and have them in stores within days.”

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Levi’s is presently piloting the technology, which it expects to roll out to all of its factories by 2020.

In denim, automation could completely reshape the supply chain for the beloved blues.

“Assuming that all key technologies currently in development are implemented, about 40 to 70 percent of labor time can be reduced through automation, since the labor time per pair of jeans can be cut from 36 minutes to 20 in a more conservative scenario, or even to 11 minutes in a more optimistic scenario,” McKinsey said. “As sewing accounts for more than half of the labor time in the standard production process of denim trousers, sewing automation will be the biggest driver for reducing labor, accounting for about 21 to 46 percent.”

That means making denim in Mexico could suddenly be on par with producing in Bangladesh, from a cost perspective.

Automation of denim production in Mexico, a key nearshore market for the U.S., could save 60 cents to 90 cents per pair of jeans, according to McKinsey. In places like Turkey, a major nearshore market for the EU, automating denim manufacturing could save as much as $1.30 to $2 per pair.

“With the automation of manufacturing, nearshoring of denim sourcing to Mexico becomes cost competitive, not just for relocation from China, but even for relocation from low-cost sourcing market Bangladesh,” the report noted. “Even onshoring from China to the U.S. achieves breakeven from a pure cost perspective in the optimistic 70 percent labor time reduction scenario.”

That, if anything, may make the case for automation adoption in an apparel industry long driven by the cheapest cost—at almost all costs.

“Adding the commercial value from increased speed and flexibility from near- and onshoring to the financial scenario makes an even stronger case for implementing advanced manufacturing technologies in near- and onshoring markets,” McKinsey said. “With a 5-percentage-point higher sell-through when denim trousers are sourced in a near- or onshoring region, relocation from Bangladesh or China to an automation-enhanced sourcing base in Mexico or the U.S. is economically viable.”