The United Nations Standard Products and Services Classification (UNSPSC) was created when the United Nations Development Program and Dun & Bradstreet merged their separate commodity classification codes into a single open system. The UNSPSC Code is the first coding system to classify both products and services for use throughout the global marketplace.
For further information about UNSPCS select from the links below:
- How is UNSPSC used in PTG?
- What are the benefits of the UNSPSC code?
- How does the code work?
- Why should businesses classify products and services?
- UNSPSC: A hierarchical structure for custom analysis
- UNSPSC code examples
- Recommendations for business
How is UNSPSC used in PTG?
Companies were originally classified based on the editorial processes developed for the Products & Tradenames Guide. UNSPSC is an extremely detailed classification system so companies are invited to check and add relevant UNSPSC codes to their profiles themselves.
What are the benefits of the UNSPSC code?
- An Open Standard: The UNSPSC Code is an open, global standard for classifying products and services.
- Available free of charge: The UNSPSC CODE is available free for printing to the public with no copyright restrictions.
Anyone can become a member of the UNSPSC Code Secretariat and members can take part in the formation and direction of the UNSPSC Codes. Membership is open to any organisation, public or private, as well as individuals who are interested in participating in the development and direction of the codes.
How does the code work?
UNSPSC is a classification code (grouping similar products), and is not a product code (describing the product and its specifications).
Every effort is made to ensure that the commodity classification supports a common function, purpose or task. The following facts are considered to avoid creation of duplicate classification:
- a commodity can have many uses
- a commodity can have many variations
- a commodity can have many names.
The classification reflects the dominant use of the commodity in the global market place. Dominant use may vary over time by country or region and by industries.
Every effort is made to reflect the international use of a commodity as opposed to regional or industry-specific applications.
Commodities are classified with other commodities that serve or support the following:
- a common function
- a common purpose
- a common task
These segments, families and classes of commodities are grouped as they are normally found in the same district, store or aisle.
All hierarchies are explicit and there are no implied hierarchies. The order of commodities within any group is not significant.
Commodity codes are unique.
Why should businesses classify products & services?
Classifying products and services with a common coding scheme facilitates commerce between buyers and sellers and is becoming mandatory in the new era of electronic commerce. Large companies are beginning to code purchases in order to analyze their spending.
Nonetheless, most company coding systems today have been very expensive to develop. They typically take up to a year to create and, for each new item coded, it takes on average an hour and a half to assign a code. A company's suppliers usually don't adhere to the coding schemes of their customers - if they assign codes at all.
Much duplicated effort and expense has gone into making codes. If there was a single universal coding convention that all companies could draw from - even if the companies wanted to customize it for specific purposes - there would be a great deal of savings.
By classifying their products & services, businesses can assist their customers with:
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Finding and Purchasing - a product and service coding convention brings many benefits to the purchasing function of a company.
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Product discovery - a common naming convention allows computer systems to automatically list similar products under a single category. When a person is searching for the category, he or she finds precisely the things being discovered and nothing else.
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Facilitates expenditure analysis - when every purchase transaction of an enterprise is tagged with a common set of product identifiers, purchasing managers are able to analyze enterprise expenditures.
- Control and uniformity across the company - codes bring a single, uniform view of all expenditures in a company. It ties together all departments and divisions, including business functions such as purchasing and settlement.
UNSPSC: a hierarchical structure for custom analysis
The UNSPSC is a hierarchical classification, having five levels. The levels allow users to search products more precisely (because searches will be confined to logical categories and eliminate irrelevant hits) and it allows managers to perform expenditure analysis on categories that are relevant to the company's situation
Each level contains a two-character numerical value and a textual description as follows:
XX Segment
The logical aggregation of families for analytical purposes
XX Family
A commonly recognized group of inter-related commodity categories
XX Class
A group of commodities sharing a common use or function
XX Commodity
A group of substitutable products or services
XX Business Function
The function performed by an organization in support of the commodity
UNSPSC code examples
In the UNSPSC classification, products and services are placed within logical categories so that people can more easily find what they are looking for and evaluate expenditures on commonly grouped items.
For example, the commodity pen refills is part of a larger class of products Ink and lead refills which in turn is part of a family of products Office supplies which is itself part of a segment of products Office equipment, accessories, and supplies. Each level of the hierarchy has its own unique number.
| Hierarchy | Category Number and Name |
| Segment | Office Equipment, Accessories and Supplies |
| Family | 12 Office supplies |
| Class | 19 Ink and lead refills |
| Commodity | 03 Pen refills |
| Pen refills=UNSPSC classification 44-12-19-03 |
Recommendations for business
- All companies should consider using the UN Standard Products and Services Classification as a routine matter of business.
- Marketing and sales organizations should endeavor to mark-up electronic catalogs, invoices, and other commercial documentation with the UNSPSC codes.
- Purchasing departments should incorporate the codes in purchasing systems to assist employees throughout the company to find and purchase supplies and, for themselves, to analyze the supplies expenditures of the company.
- To use the codes, use third party coding services to insure data integrity and accuracy.
- If a company wants to actively participate in developing the UNSPSC symbology (because it is a living coding structure), they should join the UNSPSC Secretariat. It is inexpensive, and all members have equal voting power.
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