When buyers and sellers share information, it's crucial to have a common system for classifying products and services. SAP has adopted UNSPSC (United Nations Standard Products and Services Code) as the standard for our network and buying apps.
The value of UNSPSC codes in procurement can be summarized as follows:
Standardization: UNSPSC codes streamline procurement processes by ensuring consistent classification across different organizations and industries. Buyers can view catalogs from multiple suppliers with consistent categorization in their buying applications.
Improved Efficiency: By using UNSPSC codes, buyers can easily search for and identify specific products or services, simplifying the procurement process, saving time, and reducing errors in product identification. SAP Ariba's search engine optimizes keyword results based on UNSPSC codes, so proper classification benefits suppliers' search performance.
Market Intelligence: By using UNSPSC codes, organizations can gather data on the products and services they procure. This data can be used for reporting, benchmarking, and identifying trends, which can inform strategic decision-making and negotiation processes.
The official version supported by SAP Ariba is UNDP UNSPSC v. 9.0501, which is required in solutions like SAP Business Network Discovery and SAP Business Network Catalog. However, many buyers have adopted more recent versions for support of private CIF catalogs, including other taxonomies like eClass.
UNSPSC codes have five levels (commonly four levels):
SS Segment Level (2-digit code)
XXFF Family Level (4-digit code)
XXXXKK Class Level (6-digit code)
XXXXXXCC Commodity Level (8-digit code)
The fifth level is customized by the buyer.
It is recommended that all products be classified at the commodity or class level.
It is important to realize that even if the UNSPSC value is valid, buyers may not accept the code. The buyer will manage a list of accepted codes that are mapped into their procurement process. Any UNSPSC not mapped in their system will fail to load from catalog and may fail in the Punchout Shopping Cart return (POOM). Coordination of potential UNSPSC codes should be a step in the enablement process. Simply providing the buyer a list of potential UNSPSC is satisfactory in this process.
For new suppliers, managing UNSPSC codes can be challenging. The UNDP UNSPSC site offers free code lookup and the ability to download versions through a subscription. There are also third-party services that assist in mapping UNSPSC to marketing data. A simple option for new suppliers is to map their website category hierarchy to the appropriate UNSPSC code using vLookup in Excel (for example, Hammer = 27111602). AI tools can also be used to identify UNSPSC codes based on manufacturer name, part number, or product description, although further research is needed. It's important to map to the highest level of detail possible, preferably level 4 or level 3 UNSPSC, as mapping to level 2 or level 1 reduces the value significantly.
Overall, UNSPSC codes add value to procurement processes by promoting standardization, improving efficiency, facilitating communication, providing market intelligence, and enabling system integration.