Preliminary review of the UNSPSC, its relationship to international statistical classifications and its suitability for statistical purposes

Transcription

1 ESA/STAT/AC.103/15 13 June 2005 UNITED NATIONS DEPARTMENT OF ECONOMIC AND SOCIAL AFFAIRS STATISTICS DIVISION Meeting of the Expert Group on International Economic and Social Classifications New York, June 2005 Preliminary review of the UNSPSC, its relationship to international statistical classifications and its suitability for statistical purposes

2 1. Objective This paper addresses a request originating in the report of the thirty-sixth Statistical Commission. In recording the discussion of Price Statistics 1, the report requested an investigation into the United Nations Standard Product and Service Code (UNSPSC) to discern its potential as a derived classification in the International Family of Economic and Social Classifications and the possibility for establishing correspondence between the UNSPSC and existing international statistical classifications. This paper will examine the structure, the conceptual and methodological basis and other defining features of the UNSPSC, as they compare to the international statistical classification considered to have the greatest potential for establishing concordance with UNSPSC, that is, the CPC. In responding to this query, the paper will highlight those issues of dissimilarity which are critical. 2. Background The UNSPSC was co-developed by the UNDP and Dun and Bradstreet in May Its principal function was the analysis and management of commercial procurement, primarily in developed countries. The UNSPSC is a product classification that is open, non-proprietary and is available at no cost 2. However, users who would like to have access to past versions or to submit material for reclassification, deletion from or inclusion in the classification need to acquire membership, at a cost ranging from US$6000 for Corporate Global membership to UNSPSC Trade/Standards Organization membership for one member at no cost per year. Depending on the kind of membership purchased, members can submit change requests for the codeset (following prescribed procedures), vote on change requests, participate and vote on industry revision projects, access classification guidelines and helpdesk support, among other features. The UNSPSC has been declared an open standard. Developers are therefore free to create applications which are valid according to the specification. In terms of the size of its codeset, from Version 1 of May 1998 to version 5.01 of February 2001, the codeset increased from approximately 7447 items to 13,926 items, a growth rate of approximately 26 percent per year. The current version contains approximately 20,000 such items. Because of the kind of update mechanism encouraged in the classification, the number of categories in the classification is a moving target. With respect to the larger context within which the UNSPSC operates, there is a proliferation of classifications being used for procurement/e-procurement purposes. These classifications have a wide range of custodians and have been developed to serve specific market niches. For many of these classifications, add-ons, generally provided by other actors in the classifications market, typically include easy search capabilities, coding assists, notification of updates, and free down-load for incorporation into local database matrix. Annex I contains a sampling of such classifications. The classifications examined in Annex I were generally hierarchical, placed great emphasis on ease of identification of products in the classification by number system or barcode, had links to a well used national or regional product classification and were updated on an ongoing or irregular basis in a manner that was responsive to client demand. Many of these e-procurement classifications are promoted to offer user-friendliness as a critical element of their products open standard - availability of coding assists or other coding tools, reduction of cost attaching to use of the standard, government as a key stakeholder in the successful implementation of the classification 1 Official Records of the Economic and Social Council, 2005, Report on the thirty-sixth session of the Statistical Commission, (E/CN.3/2005/27), Section F, item (b). 2 UNSPSC homepage at

3 and leader in establishing standardization and trust/security in application, including user verification and authentication and verification of authorship. Classifications in the international family of classifications offer most of these elements user-friendliness, coding tools, availability at no or low cost, trust/security in application, but with an international/regional or governmental agency as a key stakeholder and with the approval of an intergovernmental agency regarding the technical correctness of the classification. 3. Topics for consideration and discussion General issues In contrast to the e-procurement type classifications mentioned above, inclusion in the international family of economic and social classifications requires the satisfaction of a number of more technically-derived rather than strictly client-oriented criteria, these include: - registration into the United Nations Inventory of Classifications reviewed and approved as guidelines by the United Nations Statistical Commission or other competent intergovernmental board, as a reference classification. That is, the classification must have achieved broad acceptance and official agreement and must have been approved and recommended as a guidelines for the preparation of similar classifications; or - registration as a derived classification, that is by either adopting the reference classification structure and categories, and then possibly providing additional detail beyond that provided by the reference classification, or through rearrangement or aggregation of items from one or more reference classification; or - registration as a related classification that is partially referring to reference classifications, or being associated with the reference classification at specific levels of the structure only. Membership in the international family implies that the classification has been reviewed and approved as guidelines by the United Nations Statistical Commission or other competent intergovernmental board on such matters as economics, demographics, labour, health, education, social welfare, geography, environment and tourism. It also includes those classifications on similar subjects that are registered into the Inventory and are derived or related to the international classifications and primarily, but not solely, used for regional or national purposes. However, in order to be considered for registration, the classification must meet a standard of adherence to best practice, so that it could be technically comparable to those reference, derived or related classifications that have already attained such a standard. As currently constituted, UNSPSC faces the following challenges with regard to adhering to best practice in standard statistical classifications: Structure issues 1. The structure of UNSPSC is a natural consequence of the function it is intended to serve. UNSPSC is designed to have relevance in the area of procurement. Its code management principles dictate that its usefulness derives from its ability to define things bought, sold or exchanged in the marketplace and that this characteristic holds more value than being elegant or correct 3. It is evident that as structural elements, openness and accessibility take precedence over development of descriptions that are explanatory and discrete at all levels in the classification, constitution of mutually exclusive categories in the classification, proportion and balance of categories within the universe of commodities. This latter group of characteristics is paramount in following well established rules of development of statistical classifications. This is a significant difference in approach from the CPC, where the aim is to constitute categories that are well defined and delimited and which are also mutually exclusive. This is 3 UNSPSC Classification Guidelines Version 2.03, Chapter 2.4, 1 June 2004, Uniform Code Council, Inc - 3 -

4 achieved with the help of explanatory notes to complement the naming conventions/titles of categories in the classification. 2. In terms of the number of categories in the classifications, a comparison between UNSPSC and CPC 4 shows that while at higher and mid levels the number of categories in the two classifications is very roughly comparable, at the lower levels of detail, UNSPSC suddenly balloons out to a multiple of two, then a multiple of nine times the number of categories in the CPC at the lowest level. If however the number of index items in the CPC is included, the detail of the CPC increases to a similar order of magnitude as that of the UNSPSC. The index items provide an additional level of detail in the CPC that makes it comparable to the lowest level of detail in the UNSPSC. However such a level has no relevance for statistical purposes, so there was no need to extend the CPC structure further to accommodate them formally within the structure. As currently structured, the differences between the numbers of categories at the lowest levels of these classifications may also be a function of the specific methodology employed in the development of UNSPSC. An outcome of this is that as companies compete for name recognition and market niche they attempt to highlight distinctions between their products and other companies. This inevitably causes an ever larger number of categories to be created. It is not clear that these categories represent products that are intrinsically different from each other or whether they are sometimes simply named differently. 3. Additionally, in the UNSPSC, the higher level categories or Segments contain what would be considered an unlikely mix of products, by CPC standards. For example, the category containing live plant and animal material also contains the accessories and supplies relating to the live plant and animal material. This means that a given aggregation 5 could contains cats and dogs, but also cat and dog food, kennels, cages or their accessories and leashes or leads. The CPC on the other hand does not aggregate live animals or plants with the implements or equipment used in their production, maintenance etc, as the latter would be classified with products which were intrinsically similar to them Concerning an equitable balance of higher level categories across the economic spectrum it can be seen that the UNSPSC structure has not evolved with a sensibility to such requirements 7. The classification is densely constructed in the areas of Industrial Equipment, Equipment Components and Supplies and Manufactured Products, while the Services area is relatively lightly covered. Indeed in the highest level aggregation put forward, the are lumped together into one highest level category, whereas goods are dispersed over four such categories (see Annex II). 5. As an example, another procurement classification, the UNCCS used in the United Nations system, employs an aggregation structure that was very similar to the current CPC structure. Conceptual Issues a) Product typologies - Within the international family of classifications, key design features of the categories within classifications are: a. assignment of a code within the classification; b. naming or identification of the category; and c. description of the contents of the category. UNSPSC on the other hand is designed for carrying out the first two functions product classification and product identification, but does not attempt to perform the third function, product description. At its lowest level, its stated aim is accurate product naming rather than defining products in detail 8. In creating categories, it places some emphasis on being able to articulate with industry standard dictionaries and company catalogs, e.g. a white blanket can be classified in in the Segment - 4 See Annex II, Table 1 5 See UNSPSC Segment Live Plant and Animal Material and Accessories and Supplies 6 See CPC Section 0 Agriculture, forestry and fishery products 7 See Annex II, Table 2 8 UNSPSC Classification Guidelines Version 2.03, Chapter 3.3, 1 June 2004, Uniform Code Council, Inc - 4 -

5 Domestic Appliances and Supplies and Consumer Electronic Products or with Hospital blankets in the Segment Medical Equipment and Accessories and Supplies and First Aid Blankets, depending solely upon the purchaser of the commodity and having nothing to do with the intrinsic nature of the given commodity. This does not make for mutually exclusive categories, as the naming conventions alone are not always enough to draw the boundary line. For example, category is simply titled Blankets, while category is titled Hospital blankets. Neither of these titles excludes items from the other category. This greatly increases the number of categories in the lowest level of the classification. This may be advantageous in a commercial setting, but is not in keeping with best practices normally applied in the development of a statistical classification. By contrast, in the CPC, explanatory notes are provided for categories, with a view to conveying a sense of the unique and intrinsic nature of each category in the classification, regardless of the naming convention adopted for that product in various settings. The blanket would be classified to Division 27 Textile articles other than apparel, in Subclass regardless of the purchaser. As a result, CPC can approach the ideal of mutual exclusivity much more closely. b) Boundary considerations Commodities in the UNSPSC are defined through noun/modifier names, that is, one or more words, usually nouns, for identifying a commodity along with a modifier comprising one or more words for limiting or qualifying the sense of the noun or noun group in the UNSPSC codeset. 9 The UNSPSC does not include attributes to describe physical, compositional or structural properties of a commodity. It looks to governmental and/or industry standard dictionaries to provide full commodity descriptions 10. The boundaries of individual categories in the classification have therefore not been defined through the use of definitional description or through listing of what is included or what is excluded from the category. The user is therefore very often left to interpret a category according to his understanding of the title of the category or to resort to other sources for leads in this regard. This is true at the lowest levels, but it is also true with regard to aggregation into higher levels. Similarity criteria have also not been specified for the construction of broader groupings. This introduces an unnecessary degree of subjectivity into the classification and limits its capacity as an analytical tool. Also, as a prospective measure, when new commodities are presented for classification, the establishment of similarity criteria would have served to give direction in categorizing these commodities appropriately. c) Exhaustiveness of categories - Attempt has not been made to render the contents of groups within the classification exhaustive. They are by definition partial, as users can submit request to add/change/delete or retire/move commodity items, classes, families and/or Segments, on an on-going basis, as long as they follow the prescribed procedures for doing so. It is noteworthy that categories are not created for not elsewhere classified, or some similarly described residual category. d) Harmonization - So far, it is unclear what efforts have been made at harmonization, as no correspondence tables have been published as part of the documentation of the classification or have been reported as under development. Mutually consistent value sets have not been developed for the same or closely related variables in other classifications. As shown in Annex I, the aggregation structure of the classification diverges significantly from the CPC. Same can be expected in its relationship to other product or activity classifications in the family. This places some restrictions on the usefulness of the classification in economic analysis, where the classification can be used for example to articulate between exports and imports and production prices. Typically, trade statistics are collected using the Harmonized Commodity Description and Coding System (HS). This is easily convertible to CPC/SITC/BEC. However, at the time of writing, the UNSPSC is not known to have links with any of these classifications. So that even though the UNSPSC may be viewed as a competent instrument for financial/commercial purposes, in this regard, it is inadequate as an analytical tool. 9 UNSPSC classification guidelines, Uniform Code Council Inc., Chapter 4.6.1, pg UNSPSC classification guidelines, Uniform Code Council Inc., Chapter 4.6.1, pg

6 e) Other analytical usefulness - UNSPSC, by design, is subject to continuous update. This renders it virtually useless for time series analysis, as the higher level groupings which would be used for such purposes are constantly being reconstituted, as outlined in c) above. Methodological Issues 1. Concerning price statistics, the draft for the revised manual for the export and import price indices 11, being developed by the IMF, notes that imports are normally recorded by customs authorities in merchandise trade statistics (using the HS, SITC, BEC, CPC, PRODCOM and EBOPS) and that this is a useful starting point for the coverage of goods. The potential usefulness of the UNSPSC would therefore inhere in an ability to establish correspondence with this group of classifications, which already have established links among them. Links have already been established between the CPC/SITC/HS and CPC/EBOPS/GNS.W.120, SITC/BEC, CPC/PRODCOM, CPC/HS/PRDODCOM. The same argument would hold with regard to. 2. Completeness of coverage - There are also some lesser problems associated with inclusion of goods, which can be assumed to be surmountable, as the classification is open to ongoing update, it is theoretically possible to include these products. Just to mention a couple of obvious omissions in the transport area, no category is available for mixed mode land transportation for passengers, for airport operation (even though categories are available for airport tower or airport buildings or for railway pushing or towing. Positioning of UNSPSC vis-à-vis other classifications in the field: 1. The presentation standard and user-friendliness of the UNSPSC appears adequate for the purposes for which it is designed: e-procurement being an important goal in this regard. A simple search by code number and code name is provided at the Internet interface provided for this classification 12. Downloads of the classification can also be made free of charge. 2. UNSPSC can be an appropriate tool for use in marketing research. 3. There is a wealth of classifications in use world-wide for the primary functions which the UNSPSC performs. A small sampling is presented in Annex I. Users appear to be loyal to these classifications based on: stipulation by governmental agency or other administrative body;, historical preference; ease of use, including availability of links to other classifications used in the conduct of business; support by third party coding service With respect to predominance in the field of procurement classifications, no one classification was encountered that would: - accommodate the full universe of products - cross national and regional boundaries in terms of their usage - articulate with the international economic classifications already in wide usage. 4. Correspondence between UNSPSC and CPC Since the issue of establishment of correspondence between the UNSPSC and classifications in common use in the area of economic analysis emerged as a substantial measure of it usefulness, it was decided to take a preliminary look at the possibility for establishment of concordance between the UNSPSC and CPC. Because the Segments and Sections of the UNSPSC and the CPC respectively do not coincide, one broad area that could intuitively be assumed to have rough parity in the two classifications was selected. Comparison was made 11 Electronic Discussion Group: Developing a Revised Manual for the Export and Import Price Indices, Chapter 3, May 2004 draft, 12 UNSPSC homepage at

7 between the individual categories in an attempt to assess the ease or otherwise of establishing a correspondence. The broad area chosen was Transportation. Following are observations on that exercise. 1. Caveat - The exercise of establishing correspondence between the two classifications is somewhat problematic because of the lack of explanatory notes in the UNSPSC. This introduced a great degree of imprecision in assigning categories, as it was unclear exactly what was included in a given category and where its boundaries with other categories were placed. 2. UNSPSC essentially has four levels, each employing two digits. An extra level is available as an addon for categorizing business function, e.g. lease, rental. CPC on the other hand has five categories in active use. 3. In the CPC, the relevant divisions were: Division 64 Land transport, Division 65 Water transport, Division 66 Air transport, Division 67 Supporting and auxiliary transport and Division 68 Postal and courier. The relevant aggregate at the Section level also includes Divisions for wholesale and retail trade, for lodging; food and beverage serving and electricity distribution ; gas and water distribution through mains, but these were excluded from the exercise. In the UNSPSC, the relevant Segment is titled Transportation and Storage and Mail Services. The comparison therefore looked at those categories in each classification equivalent to Transportation and Storage and Mail Services. 4. Transport a. In comparing the UNSPSC and the CPC in the area of Transportation 13, the dissimilarities between the two classifications emerge at the highest level of aggregation. CPC reflects the supply concept and supports the ability of countries to report at the higher levels. Whereas CPC s first disaggregation is into categories by medium of transport: Land, Water and Air, in the UNSPSC, the first aggregation is along different lines: Mail and cargo, Passenger, Material packing and handling, Storage, Transport operations and Transport Repair and Maintenance. It is unclear what the operative defining criterion is, in making this disaggregation. b. UNSPSC treats a disaggregation by the medium of transport at the next level. While CPC disaggregates by type of transportation next railway, road, pipeline, etc. c. Comparison of categories (Annex III Tables I and II): An initial comparison of the two lower levels in the classification shows the large number of links that cannot be effected at the lowest level (n.a.) in the classifications. Because the CPC is exhaustive of products, the products can always be classified somewhere in the classification, however as they are described in the UNSPSC, they may not be ascribed to separate categories in the CPC and/or they have not been explicitly mentioned in its explanatory notes or indexes. These missing links can have a number of causes: In the case of the CPC, up to and including the last update of the classification, the product in question may not be one that had been demonstrated to be of such relative importance as to warrant a separate category, e.g. pumpkin seeds. In the CPC, these are subsumed in Subclass Oil seeds n.e.c. and oleaginous fruit. They can be found in the index to the CPC, however, no separate subclass is provided for this item. The words used to describe products may differ, for example, the category Packing, may have differing interpretations in the CPC, for example, packing of household goods is included in Moving of household furniture and other goods, Packing of parcels can be found in CPC Subclass and if packing is used in the sense of handling/loading of vessels it would be classified in CPC Subclass Other cargo and handling. In the case of UNSPSC, since new categories are initiated by the users, it could be that the user population has not yet had need of a particular product and therefore it has not yet been included in the classification, or it has been combined differently than it is in CPC, e.g. for Road transport by man- or animal-drawn vehicles, which is found in CPC Subclass 13 See Annex IV

8 64335, no comparable class appears in the UNSPSC. This could be recommended as a subcategory under UNSPSC Road cargo transport. Number/type of links it was possible to establish: Following is a categorization of the types of links it was possible to establish in this exercise, subject to the caveats identified above: Links below the subclass level in CPC: 36 of 115 categories Partial links: 50 of 115 categories Links outside of the CPC Divisions identified: 10 of 115 categories Clean links: 23 of 115 categories. 5. Conclusions Concerning the inclusion of the UNSPSC in the international family of economic and social classifications, there are a number of key conceptual and methodological differences that would impede such an acceptance. These include the following critical concerns: a. The difference in product typology is critical. The UNSPSC is competent in providing a number for each product named in the classification. However, the lack of definitional material that is explanatory in nature leads to fuzziness and variability in interpretation of the boundaries between categories in the UNSPSC. This imposes severe limitations on the classification as an analytical tool in the area of prices or any other area of analysis. b. The difference in structure between UNSPSC and other classifications in the family is profound with regard to completeness of coverage over the economy. Other classifications have been developed for coverage restricted to goods, or coverage of all goods and, but always with the aim of being exhaustive over the area chosen. In the case of the UNSPSC, since the classification is led by the dictates of individual users there are gaps in the coverage of the classification where users have not yet requested elaboration of categories. It is therefore not complete with respect to goods or or any other recognizable economic grouping. c. As was shown in Annex IV, in trying to establish correspondence between the UNSPSC and one of the classifications in the international family of classifications, the number of possible clean links between the classifications is relatively small. Transportation is in an area of the classification that is not controversial or new, as the concepts in this area are pretty well known and widely agreed. Extrapolated to the rest of the classification and especially to newer concepts such as Information, it could be seen that a very significant effort would have to be expended in changing the structure of one or both classifications involved to attain a majority of clean links between the classifications. The need to establish such correspondence is not demonstrated. d. Finally, in terms of the place of the UNSPSC in the market of possible classifications, it cannot be substantiated that the UNSPSC stands out from the myriad procurement classifications already on the market. It is marketed most for its openness and trust, not for its technical correctness. Those classifications identified in the sample were similarly marketed and none of them, including the UNSPSC can be recognized for superior technical competence. e. Concerning the large number of categories that the UNSPSC offers, while this density of categories at the lowest level may be useful, it is possible that this type of detail can also be provided by a classification such as the CPC, through the line items of its explanatory notes and or through its indexes. The CPC currently has more than 42, 000 index items, compared to the roughly 20,000 items at the lowest level of the UNSPSC. Even after discounting for duplication among CPC index items, the obvious assumption that UNSPSC is more detailed than the CPC is not correct. If the additional detail provided in the CPC were coded - simply as running numbers, without alteration to CPC s structure - it is conceivable that the CPC detail could be made to satisfy the requirement for more detail at the lower levels. However, - 8 -

9 if Other (residual) categories were not created, the problem of exhaustiveness of categories, identified earlier among the conceptual problems of the UNSPSC, would now be introduced into the CPC. f. The continuous updating of the UNSPSC is a deterrent to its use as an analytical tool, with regard to time series analysis. The CPC is updated every five years, with major structural change (revisions) limited to every other update, that is, every ten years. While users are encouraged to submit new items for inclusion, or issues for correction in the classification, such updating is done during the scheduled updating process, in order to render the classification more stable and therefore more appealing to users in the area of time series analysis. g. The chief advantage of the UNSPSC lies in its accessibility. The fact that it is free, open and user-friendly makes it a superior tool for procurement purposes. However, a part of this accessibility is the mechanism which allows continuous update of the classification. This feature militates against its adoption as a classification that can be used for economic analysis. The CPC on the other hand compares very favourably with this. Its accessibility on the Internet is comparable, in addition to being available in print. Its cost is significantly less, (with highest possible charge for UNSPC membership - $6000, while highest possible charge for CPC is $250 with copyright, $50 for individual purchase and $110 for the print publication). A searchable index is provided in the public electronic domain for the CPC, comparable to the one provided by the UNSPSC. Additionally, it can be made to provide a level of detail comparable to that of the UNSPSC at the lowest level. Most importantly, the CPC is technically defensible in terms of widely accepted statistical best practices for classifications. Additionally, a Classifications Hotline for providing guidance to users on matters of interpretation and implementation of the classification is a well user part of the client-service offering of this classification. 6. Points for consideration a. What is the expected usefulness of the UNSPSC in the analysis of prices? Was it recommended primarily for? Its appropriateness of structure The detail it offers at its lowest level Other consideration(s) b. Is it important for individual products to be separately numbered, or is it sufficient that they be recognizable in the title and/or line items of explanatory notes and/or in indexes to the classification, as can currently be provided through the CPC? c. Would the extension proposed in Item e. immediately above prove useful? d. Is it important to give users the capability for on-going update of the classification? e. How important is technical correctness in the classification, are methodological and conceptual best practices in the development and update/revision of the classification paramount, for example? - 9 -

10 Current context of UNSPSC re. procurement-type classifications A selection of Procurement Classifications occupying a similar market niche to UNSPSC Annex I Name of classification UNSPSC United Nations Development Programme Federal Supply Classification (FSC) - US Common Procurement Vocabulary (CPV) European Commission 14 National Supply Vocabulary (NSV) -UK Purpose Structure considerations Update mechanism Correspondence to other classifications Spend analysis, Hierarchical with four No acknowledged or Procurement levels: Segment, Family, endorsed crossreferences/links optimization, e- Class, Commodity and one to other commerce optional Business classifications capability function level. No explanatory notes Items of supply from Federal Cataloging Program. Used in Defense context Suitable for e- commerce purposes. Recommendation as single nomenclature for procurement of goods and. Serves industrial sector supplying service or manufacturing sector providing raw materials for products; e- commerce capability. Used in public procurement. Based on budget headings, good for historical 78 Groups, 643 Classes. Thirteen digit code available, including fourdigit class code plus extension to 9-digit national item identification number 8 digits plus check digit. Started as hierarchical, but discontinued in late 1990s. Approximately 8000 entries Three alpha digits, four numeric digits. Coverage at alpha level - (2000+), capacity for expansion to 17,000 On-going. Documented rules for update of each level. This is facilitated through a commodity request which includes: specification of category; justification re. completeness, correctness, consistency, alignment with global trade, etc. This is evaluated by Code Management staff, Segment Coordinators and Teams and member companies and end users as appropriate, prior to acceptance. Updated every 3-5 years. Revision of CPV underway, for use in fully electronic environment Items added daily. Link to NSN Based on CPA Can be cross-referenced to CPV, VISA (P-cards), CIPFA. 14 National Supply Vocabulary can be accessed at

11 Name of classification National Stock Number (NSN) - US EAN.UCC Global Product Classification (GPC) Launched by EAN International and the Global Commerce Initiative (GCI) National Institute of Governmental Purchasing Commodity and Services Code (NIGP) US non-profit Purpose Structure considerations Update mechanism Correspondence to other classifications analysis. Used by federal government for purposes of identification and inventory control - a federal cataloging system based on the concept of one NSN for any one item and one single item manager for each particular class of product. Because are not inventoried, don't fit this model. Classification for Supply chain networks for tracking and record keeping. Designed to articulate between manufacturers and retailers. This is a selling code, unable to handle As a procurement tool. Designed to bring order and efficiency to public procurement programs, when used in combination with a good procurement software package. The first 4 digits are the Federal Supply Code (FSC). The second two digits identify the item. The next two digits identify the country that buys the item. The remaining seven digits are referred to as the National Item Identification Number (NIIN) and are used to index NSNs. Flat classification system based on bricks, attributes and values. Hierarchical structure with four levels Segments, Family, Class, Brick. Hierarchical, five levels : Major category: 2-digit; Class: 3-digit; Class-Item: 5-digit: Class-Item-Group: 7-digit Class-Item-Group-Detail: 11-digit Unknown Update determined by market demand. Initiated by ACNielsen (marketing information company) and approved by a Request Assessment Subcommittee responsible for review and recommendation. No longer released periodically. New codes and changes to existing codes are incorporated into the Living Code immediately as they are approved 16. Link to FSC Advertised as complementary to UNSPSC 15. GPC provides detailed classification and attribute information for UNSPSC categories, providing greater specificity for the user. Cross-referenced to NAICS 15 EAN/UCC Global Product Classification, Uniform Code Council, 16 NIGP Code,

12 Table 1. Overall category comparison between UNSPSC and CPC Annex II UNSPSC Level Number of categories CPC Level Number of categories High Level Category (see above) 5 Section 10 Segment 55 Divisions 70 Family 352 Group 305 Class 2033 Class 1167 Commodity Subclass 2098 Table 2. Dispersion of categories over the classification at lowest level Higher level Segments of UNSPSC UNSPSC - Percentage of categories Higher level Segments of CPC CPC - Percentage of categories Raw Materials (Segments 10-15) 7 Sections 0-1, Divs. 26, 27, 28, 29, 32, 33, 34, 35, 36, 37, Industrial Equipment (Segments 20-27) Equipment Components and supplies (Segments 30-41) Manufactured Products (Segments 42-60) 13 Divs. 43, 44 Excl Grp. 448, 49 Grp Divs. 31, 39, 42 Grps. 461, 463, 464, 465, Divs , 38, 45, 47, 48 Grp Services (Segments 70-94) 15 Services in Sections Table 3. Highest level comparison between UNSPSC, UNCCS (precursor to UNSPSC) and CPC UNSPSC Segment UNCCS Section CPC Raw materials Agriculture, Forestry and Fishery 0 Agriculture, Forestry and Fishery Products Products Industrial Equipment Ores and minerals; electricity, gas and 1 Ores, minerals; electricity, gas and water water Equipment Components and supplies Food and textile products 2 Food products, beverages and tobacco; textiles, apparel and leather products Manufactured Products Goods, Other, Except metal products, Machinery and Equipment 3 Other transportable goods, except metal products, machinery and equipment Services Metal Products, Machinery and 4 Metal products, machinery and equipment Equipment Construction, Engineering, Agriculture, 5 Construction Energy and Natural Resources Trade and Business Services 6 Distributive trade ; lodging; food and beverage serving ; transport and utilities distribution Transportation, Storage, Manufacturing Support and Communication Services 7 Financial and related ; real estate ; and rental and leasing Manufacturing, start-up 8 Business and production operations, pilot plants, turnkey operations Community, social and personal 9 Community, social and personal

13 Comparison of Transportation categories in UNSPSC and CPC Table 1. Relative Size of Transportation Categories UNSPSC Families CPC Divisions Number of categories Number of categories Classes Commodities Classes Subclasses Mail and cargo transport 8 30 Land transport Passenger transport 5 16 Water transport 8 15 Material Packing and handling 2 4 Air transport 6 6 Storage 4 11 Supporting and auxiliary transport Transport Operations 4 12 Postal and courier 2 5 Transportation repair or maintenance 3 8 Not in Trnsp. (1) Total Table 2. Links Transportation UNSPSC - CPC Not in Trnsp. (4) Annex III CPC - Distributive trade ; UNSPSC Transportation and Storage and Mail Services lodging; food and beverage serving ; transport ; and utilities distribution Comment UNSPSC Code UNSPSC Title Link to CPC Title CPC Mail and cargo transport n.a Air cargo transport 662* Air transport of freight In CPC this is disaggregated into air transport for letters/parcels and other Domestic air cargo transport n.a International air cargo transport n.a Armored air transport n.a Rail cargo transport 6422 Railway transport of freight In CPC this is disaggregated by refrigerator car, tanker car, containerized freight by flat car, transport service of letters and parcels, other Boxcar transport n.a Bulk cargo rail transport n.a Livestock rail transport n.a Vehicle transport n.a Marine cargo transport 65* Water transport Division 65 includes freight as well as passenger transport. It distinguishes coastal and transoceanic transport by passenger, freight, rental and towing. Barge transport is not separately identified, nor is armored marine transport Domestic vessel transport 6522 Inland water transport of freight International vessel transport 6512 Coastal and transoceanic water transport of freight Domestic barge transport n.a International barge transport n.a Armored marine transport n.a Road cargo transport 6433 Road transport of freight 17 n.a. Category not available in the CPC at this level of detail. No explanatory note available for defining domestic. Domestic assumed to be equivalent to inland. CPC disaggregates by tanker, No explanatory note available for defining international. International assumed to be equivalent to coastal and transoceanic.

14 Local area trucking 6434* Miscellaneous local delivery This is a category at the same level as road cargo transport in the CPC; it is not a subcategory of road cargo transport. It includes bicycle or scooter messenger service Regional or national trucking n.a CPC constitutes category for tank trucks and semitrailer and trucks equipped with a container chassis Vehicle carrier n.a Relocation n.a Intermodal cargo transport n.a. Category available for intermodal passenger in CPC No category identified for intermodal cargo transport Air to ocean transportation n.a Ocean to rail transportation n.a Ocean to truck transportation n.a Air to truck transport n.a Rail truck transportation n.a Spacecraft cargo transport 663 Transport via space In CPC all transport to space are in the same class - no disaggregation into cargo or passenger Satellite launch 66300* Transport via space In CPC, this category includes all types of transport via space Experimental payload 66300* Transport via space In CPC, this category includes all types of transport via space Pipeline 644* Transport via pipeline In CPC this includes petroleum and natural gas, and other (incl. water) Petroleum products transport 6441 Transport via pipeline of petroleum and natural gas Water transport 6449* Transport via pipeline of other goods 6449 Pipeline for other goods (incl. water) Postal and small parcel and courier 68 Postal and courier National postal delivery * Postal related to letters Post office counter Other postal National postal delivery other than post office box Post office box 68119* Other postal Mailing or mail pick up or delivery 68112* Postal related to parcels Mail pickup and delivery Letter or small parcel worldwide delivery 68112* Postal related to parcels Letter small parcel local delivery Letter or small parcel local delivery Letter or small parcel local delivery Bicycle or scooter messenger 6434* Miscellaneous local delivery Local area trucking also in Passenger transport n.a Passenger air transportation 661 Air transport of passengers No higher level aggregation for passenger transport in CPC. In CPC this group is disaggregated into passenger, freight, space transport and rental of aircraft with operator Helicopter n.a Commercial airplane travel n.a Chartered airplane travel n.a Passenger railway transportation 6421 Railway transport of passengers In CPC there is no higher level aggregation for

15 Light rail vehicle transport LRV n.a Subway transport 64212* Urban and suburban railway transport of passengers Continental or inter continental rail 64211* Interurban railway transport of passengers Passenger marine transportation 6511 Coastal and transoceanic water transport of passengers 6521 Inland water transport of passengers Water taxis 65219*. Inland water transport of passengers Overnight ship cruises 65219* Inland water transport of passengers Sightseeing boat excursions 65219* Inland water transport of passengers Passenger road transportation 6431 Scheduled road transport of passengers 6432 Non-scheduled road transport of passengers Scheduled bus 64313* Interurban scheduled road transport of passengers Chartered bus 64314* Interurban special-purpose scheduled road transport of passengers passenger transport. This category is disaggregated into Interurban and urban/suburban (this includes subway and elevated) railway transport of passengers. Subway transport Continental or intercontinental rail CPC has separate classes for coastal/transoceanic and inland marine passenger transportation. No higher level aggregation for passenger transport in CPC. Water taxis Overnight ship cruises Sightseeing boat No higher level aggregation for passenger transport in CPC. CPC disaggregates into Interurban and urban/suburban In CPC this includes motor bus, tramway, trolley bus and similar vehicles In CPC rental 0fbuses and caches with operator Taxicab Taxi Parking fees Parking lot In CPC collection of parking fees is in Div 67 Support and auxiliary transport Vehicle rental Rental of passenger cars with operator Rental of buses and coaches with operator CPC distinguishes between rental with/without operator Rental of passenger cars with operator Rental of buses and coaches with operator Vehicle leasing 7311 Leasing or rental concerning transport equipment without operator This is not in Transport but in Div 73 Leasing or rental without operator Passenger Space transportation 66300* Transport via space No higher level aggregation for passenger transport in CPC. All transport via space in one subclass Experimental or educational missions 66300* Transport via space All transport via space in one subclass Material packing and handling 6711* Container handling One subclass for - Container handling Packing 67110* Containerization of goods 67110* Container handling Crating 67190* Other cargo handling Material handling 67190* Other cargo handling

16 Freight loading or unloading 67190* Other cargo handling Weighing n.a Storage 672* Storage and warehousing Storage and warehousing Farm products warehousing Other storage or warehousing Storage of grains, other storage or warehousing Silo n.a Grain elevator n.a General goods storage n.a Palletized cargo storage n.a File archive storage 84520* Archive service Storage of public archives and historical archives Furniture storage n.a Bulk storage 67220* Bulk liquid or gas storage Bulk liquid or gas storage In ground storage n.a Specialized warehousing and storage n.a Refrigerated storage 6721 Refrigerated storage Customs bonded storage n.a Hazardous materials storage n.a Document storage n.a Storage of automatic teller machines n.a Transport operations Transport arrangements 678* Travel agency, tour operator and tourist guide Travel agency, tour operator and tourist guide Freight forwarders 67190* Other cargo handling Other cargo handling Customs brokerage 67710* Airport operation (excl. cargo handling) Airport operation Transportation industry tariff comparison or freight audit 67190* Other cargo handling Other cargo handling Inspection 67190* Other cargo handling Other cargo handling Packing inspection 67190* Other cargo handling Other cargo handling Cargo survey 67190* Other cargo handling Other cargo handling Pest control inspections n.a Disinfecting and exterminating, not the administrative service of inspection, this service is included in Navigational 67300* Navigational aid One subclass in CPC for Navigational aid Tugboat 67620* Pilotage and berthing Drawbridge operations 67520* Highway, bridge and tunnel operation Drawbridge Marine navigational or 67300* Navigational air communication Terminal 67400* Supporting for railway transport Bus station Port and waterway operation (excl. cargo handling) Supporting for railway transport Bus station Port and waterway operation Stevedoring Vessel docking Pilotage and berthing Pilotage and berthing, excl. tugboat Vessel stores n.a Transportation repair or maintenance n.a Vehicle maintenance and repair Vehicle body repair or painting 8714* Maintenance and repair of transport machinery and equipment 87141* Maintenance and repair of motor vehicles 8714 Maintenance and repair of transport machinery and equipment 87141* Maintenance and repair of motor vehicles

17 87143* Maintenance and repair of trailers, semi-trailers and motor vehicles n.e.c Transmission repair 87141* Maintenance and repair of motor vehicles 87143* - Maintenance and repair of trailers, semi-trailers and other motor vehicles Transmission repair and adjustment Oil or transmission fluid change 87141* Maintenance and repair of motor vehicles Engine overhaul, motor tune up, etc Landing gear repair 87149* Maintenance and repair of other transport equipment Panel and paint 87141* Maintenance and repair of motor vehicles Maintenance and repair of aircraft and aircraft engines 87141* body repair and similar Panelbeating 87141* Maintenance and repair of motor vehicles 87141* body repair, repainting and similar Transport fuelling and vehicle n.a. storage and support Fuelling of vehicles 67590* Other supporting for road transport Transportation storage 67530* Parking lot Parking for motor vehicles, provided by parks, parking lots and parking garages, whether or not roofed Vehicle parking 67530* Parking lot Parking for motor vehicles, provided by parks, parking lots and parking garages, whether or not roofed