New Code Aids Supply Chain

Sure, global supply chain management sounds like a good bandwagon to jump on – after all, what company doesn’t want to order the best and cheapest supplies, no matter where they come from? But companies trying to do business with suppliers from around the world have learned how difficult that can be if each uses its own system for classifying products. Supply chain misalignments can result in inefficiencies for the buyer and a quick death for the supplier.

Coming to the rescue is a new code that allows companies to standardize classification of the products and services they buy and sell. The code, born of a merger of the United Nations Common Coding System (UNCCS) and Dun and Bradstreet’s Standard Products and Services Codes (SPSC), goes by the cumbersome name of N/SPSC. Introduced in February 1999, the open coding system assigns a 10-digit hierarchical number to products and services. So a specific product, like a ballpoint pen, is grouped first under office equipment, accessories and supplies, next under office supplies, then under writing instruments, and finally under ballpoint pens.

The advantage for buyers? Consistent coding of products that allows them to track and manage their supply chains. Suppliers that use the system have a competitive edge over those that don’t. Already, some early adopters of the code are making it mandatory for their suppliers to adopt it as well. A dozen companies, including American Express Co. and Rosetta Net, have already embraced UN/SPSC. The ultimate goal: a code that will allow companies of all sizes from all countries to compete equally. Now that’s globalization.