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As a supplier on the SAP Business Network, you've heard of commodity codes. You probably know that they're required in electronic catalogs and that they appear in purchase orders. But what are they and what do they represent? How do you know which ones to use? This article provides some clarity to the mystery.
Commodity codes offer a way of uniformly referring to groups of similar items or services. They have several uses in electronic commerce that benefit both buyers and suppliers.
For example, a procurement application uses commodity codes to:
Commodity coding systems assign codes to products and services. Generally, these systems are hierarchical; the more specific the product or service, the more digits in the code. Most suppliers use just a few codes, because they sell a narrow range of products or services while suppliers or distributors with a large range of offerings use more codes.
There are several competing commodity coding systems in use globally, however it is important to use the system that is used by your particular customer. The popular commodity coding systems are described below.
United Nations Standard Products and Services Code (UNSPSC)
This is the most-popular system. It uses an eight-digit hierarchical number to classify a range of products and services across a broad range of disciplines.
For example: 44121706 Wooden pencils
There are multiple versions of the UNSPSCS codeset in use. When suppliers upload catalogs, the Ariba Network maps UNSPSC codes to the version used by the buying organization.
eCl@ss
Used mostly in industry in Germany. This system has a four-level hierarchy, similar to the UNSPSC system.
For example: 24-24-01-01 Pencil (office)
eCl@ss allows for further identification of commodities through a set of standard properties. For example, properties might allow the specification of an item's color (Green, Red, or Blue) or capacity (64 GB or 128 GB).
Common Procurement Vocabulary (CPV)
Used for government procurement by countries in the European Union. Like the systems above, it uses a four-level hierarchy composed of eight digits, plus a one-digit checksum.
For example: 30192130-1 Pencils
North American Industry Classification System (NAICS)
Used for government procurement in Canada, Mexico, and the United States. This is a three-level hierarchical system composed of six digits for identifying services, such as manufacturing, installation, or wholesaling. It classifies business functions, not specific items.
For example: 339940 Pencils manufacturing
International Standard Industrial Classification (ISIC)
Published by the United Nations for the classification of services globally. This is a two-level hierarchical system that is similar to the NAICS system in that it classifies business functions, not specific items.
For example: 3290 Manufacture of pens and pencils of all kinds whether or not mechanical
There are also industry-specific commodity coding systems, such as systems for the chemical or construction industries. Some buying organizations even use their own, custom systems. Ariba applications, including the SAP Business Network, support the use of any commodity coding system.
Ariba calls the specific commodity coding system you use the commodity code domain. Use the commodity code domain that your customer uses.
What do you do if multiple customers use different commodity coding systems, but you want to publish only one catalog? Simple. Specify codes from multiple domains for each catalog item. Both CIF and cXML formats allow multiple domains per catalog item.
For greater accuracy, choose the code for the lowest possible hierarchical level. For example, to use the UNSPSC system to classify wooden pencils, you could use only six digits (441217 Writing instruments), but the full eight-digit code (44121706 Wooden pencils) is more useful and more accurate.
For more information about commodity coding systems, see the "Customer Catalog Fields" chapter in the Customer Catalog Format Reference Guide.