The United Nations Standard Products and Services Code (UNSPSC) is a global classification system used to categorize products and services. It was developed by the United Nations Development Programme (UNDP) and Dun & Bradstreet in 1998. The UNSPSC provides a hierarchical structure that allows for the classification of products and services into categories, making it easier for organizations to manage and analyze their procurement activities.
The UNSPSC is organized into a five-level hierarchy:
- Segment: The highest level, representing the broadest categories of products and services.
- Family: A more specific grouping within a segment.
- Class: A further subdivision within a family.
- Commodity: The most specific level, representing individual products or services.
- Business Function: An optional fifth level that describes the function or purpose of the product or service.
Each level is represented by a two-digit code, resulting in an eight-digit code for each product or service. For example, the code for “office furniture” might be 56-12-34-56, where each pair of digits represents a different level of the hierarchy.
Examples of UNSPSC Codes:
Segment: 56 (Furniture and Furnishings)
Family: 12 (Office Furniture)
Class: 34 (Desks)
Commodity: 56 (Executive Desks)
Uses of UNSPSC:
- Procurement: Organizations use UNSPSC codes to standardize their procurement processes. By categorizing products and services, they can streamline purchasing, reduce costs, and improve supplier management. For example, a company might use UNSPSC codes to ensure they are comparing prices for the same type of product across different suppliers.
- Spend Analysis: UNSPSC codes help organizations analyze their spending patterns. By categorizing expenditures, companies can identify areas where they are overspending or where there are opportunities for cost savings. For instance, a business might use UNSPSC codes to track how much they are spending on office supplies versus other categories.
- Inventory Management: UNSPSC codes can be used to manage inventory more effectively. By categorizing products, organizations can track stock levels, identify slow-moving items, and optimize their inventory levels. For example, a retailer might use UNSPSC codes to ensure they have the right mix of products in stock.
- E-commerce: Online marketplaces and e-commerce platforms use UNSPSC codes to categorize products and services, making it easier for customers to find what they are looking for. For instance, an online store might use UNSPSC codes to organize their product listings and improve search functionality.
- Compliance and Reporting: UNSPSC codes can be used to ensure compliance with regulatory requirements and to generate reports. For example, government agencies might use UNSPSC codes to classify their purchases and report on their procurement activities.
In summary, the UNSPSC is a versatile and widely-used classification system that helps organizations manage their procurement, spending, inventory, and compliance activities more effectively. By providing a standardized way to categorize products and services, it enables better decision-making and improved operational efficiency.