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What is Product Taxonomy and UNSPSC

Taxonomy is a way to categorize and organize things. Product Taxonomy is a way to categorize products for easier handling and searching.

There are many ways to create product taxonomy.
  • Products can be classified based on what products is (Furniture for example).
  • Products can also be classified based on how they are used (Office use).
  • Products can be classified based on brands (Inspiron, XPS).
As you can see, there can be several ways to categorize products and create product taxonomy.  While many organizations choose to go with standard taxonomy such as UNSPSC, Other Organizations come up with their own unique way to categorize products.

What is UNSPSC Code

UNSPSC is the acronym for “United Nations Standard Products and Services Code”.

UNSPSC was developed by UNDP (United Nations Development Programme) along with D&B corporation in 1998 to standardize product taxonomy and facilitate global eCommerce.

UNSPSC is a hierarchical categorization of all products and services as defined by the governing body. It has five levels of hierarchy
  • Segment– The logical aggregation of families for analytic purposes (Example, 44 Office equipment, accessories, and supplies)
  • Family– A commonly recognized group of inter-related commodity categories (Example,  10 Office machines and their supplies and accessories)
  • Class– A group of commodities sharing a common use or function (Example,  15 Duplicating machines)
  • Commodity– A group of substitutable products or services (Example, 01 Photocopiers)
  • Business Function– The function performed by an organization in support of the commodity (Example, 14 Retail). Business Function is optional.
So “44101501” identifies a photocopier. If we add 14 also to the UNSPSC, it will identify Photocopier used in retail function.
product taxonomy[/caption]

UNSPSC: Benefits and Shortcomings

Use of UNSPSC to define product taxonomy offers several benefits to the organizations
  • Like other well defined product taxonomy, UNSPSC allows an organization to have complete spend visibility for analysis.
  • UNSPSC is supported by a global body and used by several organizations. This ensures that taxonomy is tested and works well across industries, sectors and organizations. It helps organizations avoid making costly mistake of defining wrong taxonomy on their own.
  • It will enable electronic exchange of commerce, facilitating next wave of global eCommerce.
  • It will help optimize supply chains that run across organizations as all organizations will be talking same language of product and services taxonomy.
UNSPSC has certain disadvantages also as companies might have unique needs to categorize products. The issue can be resolved by maintaining alternative taxonomy along with UNSPSC though.


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