The United Nations Standard Products and Services Code (UNSPSC) is a taxonomy for classifying products and services in e-commerce and procurement systems. This classification system provides a common, hierarchical language that enables businesses and governments to analyze spending and manage supply chains with precision. The code streamlines transactions, enhances data integrity, and facilitates efficient global commerce. Its adoption is foundational for achieving transparency and automation across diverse business operations.
Defining the UNSPSC Code
The UNSPSC Code is an open, multi-sector classification system for goods and services bought and sold worldwide. It acts as a universal language for cataloging, ensuring a specific item is identified the same way regardless of the company, country, or procurement system used. This standard was initially developed in 1998 through a collaboration between the United Nations Development Programme (UNDP) and the Dun & Bradstreet Corporation.
The code uses a four-level hierarchical structure represented by an eight-digit numeric system. Each product or service is placed into a single, specific category, eliminating ambiguity in transactions and data analysis. Implementing this classification allows organizations to automate the processing and data collection related to spending, starting from purchase orders and supplier accounts. This structured approach ensures all parties—buyers, suppliers, and analysts—are referencing the exact same item, which is necessary for effective supply chain management and procurement optimization.
The Structure of the UNSPSC System
The entire UNSPSC taxonomy is built around a four-level hierarchy, where each level progressively narrows the description of a product or service. This structure is represented by an eight-digit code, with each level occupying two digits. An optional fifth level, consisting of two additional digits, can be added to indicate the business function, such as rental, maintenance, or wholesale.
Segment
The Segment is the broadest classification level, represented by the first two digits of the code. This level aggregates products and services into general categories for analytical purposes. For example, the segment “Office Supplies, Equipment and Accessories” is a large grouping that encompasses a wide range of items.
Family
The Family level is the second layer of the hierarchy, represented by the next two digits, which further groups the segment into related categories. This grouping helps in narrowing down the product type within the broad segment. Following the previous example, within the “Office Supplies” Segment, one might find the Family “Office Machines and their Supplies and Accessories”.
Class
The Class is the third level, represented by the third pair of digits, providing a more detailed grouping of products or services within a family. This level moves toward a specific type of item, but still encompasses a range of similar goods. Continuing the example, the “Office Machines and Supplies” Family might contain the Class “Supplies for printers, fax machines and photocopiers”.
Commodity
The Commodity is the fourth and most specific level of the code, represented by the final two digits. This is the level that provides the precise description of the purchased item or service. Within the “Supplies for printers” Class, the Commodity might be identified as “Toner,” resulting in a complete and unique 8-digit code for that specific product.
Why Standardized Coding is Necessary
A standardized coding system eliminates the internal inconsistencies and varied naming conventions that plague large, decentralized organizations. Without a common classification, different departments might use multiple descriptions for the same item, which compromises data integrity. The universal application of the UNSPSC ensures that an item, such as a “docking station,” is always coded the same way regardless of the purchasing department or geographic location.
This uniformity enables accurate spend analysis. By tagging every line item with a consistent code, companies can track exactly what is purchased across different divisions and locations. This overview allows procurement teams to identify opportunities for supplier rationalization, negotiate better rates through volume consolidation, and standardize procurement practices.
Practical Uses in Business and Government
In business, the codes are frequently integrated into Enterprise Resource Planning (ERP) and Procure-to-Pay (P2P) systems, such as Oracle and SAP Ariba, to classify products and services. This integration is used for tasks like tagging line items in purchase orders, which enables automated processing and categorization of expenditures.
For suppliers, the system is used to manage and publish catalogs, ensuring their offerings are consistently classified and easily searchable by potential buyers. The classification also facilitates electronic Requests for Proposal (RFPs), allowing buyers to solicit bids for specific commodities globally. Many government agencies, including various US state and federal bodies, mandate the use of the UNSPSC in their procurement processes to ensure a transparent and comparable basis for analyzing public expenditure and meeting regulatory reporting requirements.
Managing and Maintaining the Code Set
The governance and ongoing maintenance of the UNSPSC code ensure its relevance in an evolving commercial landscape. The United Nations Development Programme (UNDP) owns the code, and its management has historically been overseen by GS1 US. This organization is responsible for overseeing code change requests, revising the codes, and issuing regularly scheduled updates.
The code set is not static; it is regularly updated through new version releases to account for the emergence of new technologies and services. For example, a recent update included the addition of codes to support specialized categories like humanitarian relief items. Businesses must stay current with the latest version to maintain data integrity and ensure accurate classification of new purchases.
Distinguishing UNSPSC from Other Classification Systems
The UNSPSC is a product and service classification system, meaning it classifies the goods and services that an organization buys or sells. It is designed for granular, transactional tracking within procurement and supply chain functions.
In contrast, systems like the North American Industry Classification System (NAICS) and the older Standard Industrial Classification (SIC) classify business establishments or industries based on their primary economic activity. NAICS is a six-digit code used by statistical agencies to classify a company by its production process. While NAICS and SIC are used for industry targeting, economic census reporting, and regulatory filings, they do not classify individual items on a purchase order. The core difference is that UNSPSC tracks what is bought, while NAICS/SIC tracks who is doing the buying or selling.