UNSPSC coding convention

What is the UNSPSC?

The United Nations Standard Products and Services Code is a hierarchical convention that can be used to classify any product or service. Applying a standard coding system allows spend analysis across the board, enabling procurement functions to deliver on cost effectiveness demands. It also enables those who use it to make the most of e-commerce capabilities. To view the UNSPSC website please click here.

What are the benefits of coding products and services?

Today’s customers demand faster fulfilment at a lower cost. Increasingly business is eBusiness. The need to approach procurement more strategically has never been greater. This means that fast, simple, accurate classification of goods and services an essential in today’s marketplace. The UNSPSC is a single coding convention that all companies can use so that they all speak the same language in order to speed up and rationalise processes.

By embedding UNSPSC classification standards into management systems, all parties throughout the extended supply chain benefit. Examples of benefits:

For a buying organisation – procurement can monitor how much is spent buying what goods/services. Information is readily available for analysis. Manual classification of purchases is no longer required, thus facilitating automated processing of purchase orders.
For a selling organisation – sales teams can monitor sales channels and distribution all the way to the end user. Market intelligence can quickly be gathered via electronic platforms for accurate sales analysis.

How does UNSPSC work?

The UNSPSC is a hierarchical classification with five levels. These levels allow analysis by drilling down or rolling up to analyse expenditure types. Each level in the hierarchy has its own unique number. The levels are as follows:

segment (aggregation of families for analytical purposes)
family (group of interrelated commodity categories)
class (group of commodities sharing common characteristics)
commodity (group of products or services)
business function (function performed by a group in support of the commodity).

For example, the code for ‘pen refills’ would read 44-12-19-03. This code is arrived at as follows:

Segment = 44 for office equipment, accessories and supplies
Family = 12 for office supplies
Class = 19 for ink and lead refills
Commodity = 03 for pen refills
Business function = not used at SCC

For further information about UNSPSC coding please view the UNSPSC website: http://www.unspsc.org/

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