International commerce is integral to today's economy and represents a significant portion of a company's profitability and long-term growth. Businesses of all sizes face the challenge of successfully entering new markets overseas, as well as intense global competition accelerated by the growing use of the Internet in cross-border commerce. Indeed, it is clear that the emergence and growth of electronic commerce has altered the landscape of the global marketplace.

How does a business gain a competitive edge in this global market free-for-all? Adopting the new UNSPSC, a commodity coding system developed jointly by D&B and the United Nations, in conjunction with procurement systems such as ERP, legacy and desktop procurement systems, and internal customised solutions, can provide that advantage. Utilising the UNSPSC, companies of any size and from any region can communicate more accurately and efficiently about products and services, reaching broader markets and gaining market share. For companies using procurement business applications, the UNSPSC can improve existing operational, sales/marketing and distribution systems.

The UNSPSC is an open, non-proprietary system of codes and standardised descriptions for classifying all goods and services. It is available free of charge through www.unspsc.com.

How the UNSPSC works

The UNSPSC brings both precision and consistency to an operation. Companies need to assign codes to electronically identify the products they sell, as well as to the products they obtain via their supply chain. These precise codes are then incorporated into the company's electronic and paper-based trade documents such as Web sites, product catalogues, invoices, purchase orders and inventory/sales slips. By applying standard codes to each product and service it buys and sells, a company can automatically and consistently track its entire supply and demand chain activity. The growth of worldwide e-commerce makes the adoption of a universal coding system essential to transcend language differences and unique product descriptions.

The value of the UNSPSC lies in its breadth, depth and international acceptance. In the unlikely event that a code for a product or service doesn't currently exist within the UNSPSC, a request for a new code may be made to the Code Management Association (CMA), the non-profit membership-based association of UNSPSC users. The UNSPSC is easy to customise and amend, making the system globally compatible for companies worldwide. In addition, third-party coding services are available to companies that are implementing the UNSPSC, helping to ensure data integrity and accuracy.

The UNSPSC is designed to serve three primary functions:

• Spend analysis: reporting on what products are being purchased to support budgeting and strategic sourcing decisions
• Product sourcing: identification of relevant suppliers of a specific product or service
• Promotion of product awareness through universally used and accepted search engines and Internet-based applications

How the UNSPSC enhances procurement

With more than 8,000 categories to classify the products and services bought and sold everyday, the UNSPSC can facilitate a company's procurement system by streamlining procurement processes, reducing costs and increasing financial performance. Companies that implement the UNSPSC with their procurement systems can also reduce new product development and manufacturing time. To realise their full potential, procurement systems are often integrated with a relational database system or other data mining capability. The UNSPSC complements these systems by providing data standards for both customers and suppliers, creating standardised reporting and analysis capability.

Benefits to Buyers

The ability to effectively identify potential and existing suppliers and the products and services they provide is critical to procurement processes and supplier analysis. The UNSPSC system serves all these functions and also can be used as a high-level index to cross-reference products and services with given suppliers, resulting in maximum purchasing power. Businesses can easily track and monitor expenditures, internal spending limits and purchase authorisations by encoding current and legacy data with UNSPSC codes down to category details. The UNSPSC also helps enable companies to achieve significant savings in procurement and marketing costs not only through reduced internal processing and management but also by enabling increased leverage with suppliers by facilitating greater volume. Companies successful in incorporating the UNSPSC system have the ability to save between 5 to 15 percent of corporate spending.

As the global purchasing card leader, Visa U.S.A. supports the UNSPSC and new product developments that provide customers the ability to further improve their procurement processes and reduce costs. "Visa strongly endorses the UNSPSC standard and will continue to work with D&B to facilitate online purchasing and procurement on a truly global, unified basis," says Marcie Verdin, Vice President of Purchasing Card for Visa U.S.A. "Valuable procurement data provided by the new classification system and D&B's comprehensive database, paired with the superior reporting functions of the Visa Purchasing card, delivers a single integrated solution to companies managing procurement on a universal scale."

Competitive advantages to buyers using the UNSPSC can include:

• Uniform view of spending
• More precise analysis
• More flexibility
• Buying efficiency
• Savings on code development and maintenance

Benefits to Sellers - A global standard

With the emergence of the UNSPSC as the global standard for identifying products and services, buying organisations increasingly are choosing suppliers that can provide a UNSPSC code for each product involved in every transaction. Suppliers who use the UNSPSC can realise increased customer satisfaction, an expanded customer base and focused market research by product group. The UNSPSC-encoded product catalog can help suppliers expand their marketplace by increasing the likelihood of a supplier's product being located and considered - a distinct marketing advantage. As a worldwide standard, the UNSPSC is emerging as the buyer-preferred system of locating suppliers via Internet search engines.

Competitive advantages to sellers using the UNSPSC can include:

• Faster customer discovery of your products
• More streamlined distribution channels
• More focused market research

Benefits to sales - Distribution and marketing

Manufacturers rely on accurate sales and inventory data for communication with distributors and channel partners. The more complicated the distribution chain, the greater the chance for error and miscommunication - especially when manufacturers are multinational and multilingual. Unlike coding systems such as SIC (Standard Industrial Classification), NAICS (the North American Industry Classification System) or other proprietary coding systems, the UNSPSC, with its hierarchical structure and standard coding framework, offers the advantages of a product-centric viewpoint with consistency and flexibility. Marketers can easily add the codes to their materials to greatly facilitate customer discovery and retrieval of product information. Managers can use the system to analyse spending more accurately and efficiently. The UNSPSC lets all parties in the distribution chain refer to a product in a way that is precise and consistent.

Promoting global commerce and improving the bottom line

All entities in the supply and demand chain - manufacturers, suppliers, distributors and sales partners - benefit from the UNSPSC, the first, open, global product classification standard. The UNSPSC turns much of what is now raw, unintelligible data into useful, uniform information that can bring greater efficiency and focus to expenditure analysis, electronic commerce, logistics and supplier sourcing.