Levi’s invests in machine learning to optimize fulfillment and shipping – Sourcing Journal
Levi Strauss & Co. (LS&Co.) hopes new machine learning technology can help it circumvent some of the current problems plaguing its supply chain and distribution networks.
As part of the company’s digital transformation journey to generate $10 billion in revenue by 2027, Levi Strauss developed the BOOST (Better Optimization Of Shipping and Transport) engine. The BOOST engine is designed to efficiently fulfill e-commerce fulfillment orders by using machine learning and artificial intelligence (AI) to identify the best location to ship each individual item.
“When someone goes online to make a purchase, we have fulfillment centers where we keep inventory specifically for those orders,” said Louis DiCesari, global head of data, analytics and AI at LS&Co., in a statement. “One of the things we can do with BOOST is to broaden that search for available products.”
Currently, BOOST accounts for nearly 40% of e-commerce orders, according to Inna Saboshchuk, data science manager of LS&Co’s global operations.
“By Black Friday this year, we should fulfill 100% of BOOST-eligible US orders, and we are now expanding this across our entire European business,” Saboshchuk said.
The company explained how the technology works: A consumer who wants to buy a Levi’s Trucker jacket online in a specific wash may discover that it’s out of stock. Typically, an out-of-stock product is not available at company distribution centers. However, BOOST can determine if the item is in a store near the customer and make it available to that customer.
“We don’t want to miss the opportunity to delight shoppers and bring them their next Levi’s wardrobe staple, as it’s not technically available online, but easily accessible in a local storefront,” DiCesari said. .
BOOST’s AI-based calculations allow LS&Co. to reduce its impact on shipments without shifting the burden onto the customer, the company said.
In addition to opening more inventory to consumers, BOOST uses artificial intelligence capabilities to improve operational efficiency and reduce costs for customers while delivering a premium product.
Levi Strauss also said the system could even solve the problem of split shipments.
“If a consumer orders three items from Levi’s and receives three packages from Levi’s, that’s a bad experience for the customer and for the environment,” DiCesari said.
The engine is designed to consider all elements of the process, from shipping to packaging to labor, optimizing decision-making and saving time and money.
“The beauty of this is that we were able to automate all of this, so it’s really a decision-making engine, not just an information engine,” DiCesari said.
The technology launch comes as the company continues to build its distribution capabilities. Last year, the Levi’s Henderson, Nevada distribution center became the first company-owned and operated facility to fulfill orders from e-commerce, retail and wholesale channels.
Over a period of 10 months, the team transformed over 100,000 square feet of open space on the second floor of the facility into a warehouse that could serve the West Coast e-commerce business.
Today, Levi Strauss is establishing a new e-commerce distribution center in northern Kentucky, slated to open in 2023. The company is investing more than $48 million and creating approximately 300 jobs in the existing facility of 575,700 square feet in Erlanger, Ky.
Overseas, the company opened a state-of-the-art, 750,000 square foot LEED-certified distribution center in Dorsten, Germany, which also achieved WELL Health-Safety certification.
Aiming to start operating in April 2024, the facility will handle the distribution of apparel, accessories and footwear across wholesale, retail, digital, e-commerce and marketplace channels. LS&Co. plans to employ up to 650 workers when the plant reaches full capacity of 55 million units in 2026.
LS&Co. sought to equip its employees with machine learning knowledge while growing its data-driven aspirations. Last summer, it launched an eight-week fully paid machine learning bootcamp to bring AI training to employees across all departments, from corporate teams to store and distribution center workers.
“Fashion has been one of the biggest offenders when it comes to climate change,” said Katia Walsh, LS&Co.’s chief AI officer, at VentureBeat’s Transform 2021 virtual conference. “AI can save fashion because it can bring us the sustainability, creativity and profitability that a company like ours aspires to have.”
For an institution founded in 1853, Levi Strauss & Co. has made it a point to move with the times. According to 2021 data from algorithmic merchandising company Nextail, L&SCo. is the most data-forward-forward of the 22 major fashion companies studied, with a score of 27.4. This indicator is measured by the total number of data-related professionals divided by the turnover of each brand studied.