The UNSPSC system works both as a guide and a common language for modern supply chains. Its hierarchical structure for classifying products enables businesses to streamline operations. Classifying products correctly is the first step of utilising a common, consistent system for continuous governance. Delivering clarity and cost savings for all parties.
This article will share how UNSPSC can and should be used for industrial companies in their maintenance, repair and operations (MRO) data, to bridge the gap between unique company approaches and working with common global supply chains.
The United Nations Standard Products and Services Code (UNSPSC) is a globally recognised classification system for products and services. that provides a standardised taxonomy to classify goods and services. Think of it as a universal language for products and services - it helps everyone use the same definitions at all levels of the supply chain.
It was originally created jointly by the United Nations Development Programme (UNDP) and Dun & Bradford for the purpose of creating a procurement services tool for UN agencies. UNSPSC was released free of charge for anyone to use in 1998 with 8000 codes at the time. Since then UNSPSC has grown to 150 000 unique codes.
Each UNSPSC code consists of an eight-digit numeric identifier, organised in a four-level hierarchical structure, with an optional fifth level:
1. Segment (highest level of classification)
2. Family (groups related products and services)
3. Class (further defines the groupings)
4. Commodity (most detailed level of classification)
5. (Optional) Business Function
Industrial procurement and inventory management processes can quickly become a complex due to the chaotic web of data that is difficult to navigate without deep understanding and experience.
Mapping datasets to UNSPSC classification complements existing standards already in use and is a useful tool to organise MRO data. It aids making complex data and process simpler to understand and more manageable.
Managing MRO data effectively is crucial to optimising inventory, reducing procurement costs, comparing suppliers and products on an even playing field and ensuring compliance. By incorporating UNSPSC codes into MRO master data management, organisations can:
– Standardise product classification across multiple locations and systems.
– Identify and correct duplicates, mislabelling, and other mistakes
– Improve supplier collaboration by using a common taxonomy.
– Enhance spend analysis by categorising MRO purchases.
– Facilitate better procurement strategies and cost-saving opportunities.
– Streamline enterprise resource planning (ERP) and computerised maintenance management systems (CMMS).
After having established consistency and quality across your existing dataset, UNSPSC can also be an aide for handling future data received.
We believe that UNSPSC adds value and we recommend to our customers that they apply UNSPSC codes in their operations systems to improve data standardisation.
SAP and IBM Maximo are software used widely used in industrial organisations for MRO materials management. Both the SAP Material Master and the Maximo Item Master includes fields where UNSPSC codes can be assigned to materials for improved search-ability and reporting.
Implementing UNSPSC codes in MRO master data can be challenging, particularly for large enterprises with legacy data and disparate systems. As a dedicated improvement campaign (see also our page on Data Enrichment), or, as part of a general support, our team helps companies implement UNSPSC quickly and efficiently so that operations can start benefitting thanks to a streamlined methodical process.
We do this through cleaning existing MRO data, removing duplicates, and standardising item descriptions, before then mapping existing data to UNSPSC to assign correct UNSPSC codes to existing materials and services.
If you'd like to know more, or find out how we could help your company with implementing UNSPSC codes then please Get In Touch.
AI has proven itself to be a useful tool as part of any classification program, but it can’t as yet handle the task on its own. Our internal work and work with our customers consistently shows that even the latest AI tools continue to struggle to navigate the "grey areas" present in both the data set and the classification codes themselves.
Applying UNSPSC codes requires contextual understanding of the product descriptions, missing datapoints and the erroneous current categorisations of the legacy datasets. Human expertise remains a necessary and important element that is used together with AI and other tools to untangle data and apply new classifications.
While UNSPSC codes offer numerous benefits, organisations may face challenges when implementing them for MRO data management:
– Data Quality Issues: Many data sets contain inconsistent descriptions, making accurate code assignment difficult.
– Complexity: MRO materials often include highly specific spare parts that may not fit neatly into predefined UNSPSC categories.
– New classifications: As new materials and services are introduced, existing codes may not be sufficient to correctly classify them.
As we detail above, UNSPSC is one element in an overall data classification and governance approach, but it cannot cover all needs. So it is important to recognise that UNSPSC together with other standards will make up the best practice approach for your organisation.
Organisations looking for UNSPSC codes can access them through several sources, including:
– GS1 USWebsite: The official UNSPSC database is available at https://www.gs1us.org.
– UNSPSCOnline Portals: Several third-party websites provide searchable UNSPSC lookup tools.
UNSPSC enables standardised classification, enhancing procurement efficiency, analysis, and decision making.
Yes, but it is time-consuming. Expert services using specialist tools can help assign codes faster and more accurately.
No, but they present significant benefits. Allowing companies to apply a common approach aligned across industries, in parallel with company specific in house classifications and processes.
By implementing UNSPSC codes effectively, organisations can achieve better MRO data standardisation, improve procurement efficiency, and optimise inventory management.
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