Classification SystemsJune 2007

Global Product Classification (GPC)

©2006 GS1 Canada3

Introduction

• The Global Commerce Initiative (GCI) (a global user group

comprised of the world ’s biggest multi-national

manufacturers, retailers and service providers) agreed on the business rules for setting up a globally standardized model:

• Global Product Classification (GPC) Schema.

• Objective

• to improve supply chain performance between manufacturers and

retailers by the voluntary adoption of industry standards for product

group identification

• GPC allows trading partners to communicate more efficiently

and accurately throughout their supply chain activities

©2006 GS1 Canada4

Introduction

• The GS1 community owns the GPC Schema

• Global Data Synchronization is dependent on trading partners using the same global standard product classification schema to enable product search,view and subscription and publication activities

• The Global Data Synchronization Network (GDSN) uses the GPC system

• Only items classified according to the GPC will be registered in the GS1 Global Registry

©2006 GS1 Canada5

Business Rationale

• Global positioning:

• group products the same way globally (synchronization)

• to enable product search, view and validation as well as

publication and subscription match.

• Global comparison• Independent of internal reporting classifications• Language barriers could be eliminated• Multitude of brands globally • Normalization of class attributes • Ability for potential usage of POS data

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• Improve accuracy of product information• Eliminate redundant activities and reduce the cost of

item set-up and maintenance• Allow mapping to different trading partner or third

party solution provider views, reducing costs• Opportunity to group products with category specific

attributes• Simplify publication and subscription processes• Enable simple search mechanisms with consistent

results

Benefits to supply chains/networks

©2006 GS1 Canada7

What does GPC consist of?

Brick Code (Classification Key)

Brick Attributes (typically max. 7 per Brick)

Brick Attribute Values

GPC Segment

GPC Family

GPC Class

CL

AS

SIF

ICA

TIO

N

IDENTIFICATION KEY

Product Group

DESCRIPTION

Key to the Classification Hierarchy was the definition of the Lowest level - Bricks – not the hierarchy

EVERY product MUST be assigned to 1 Primary Brick!

brick code is MANDATORY for GDSN

An industry segmentation or vertical

A broad division of a segment

A group of like categories

Categories of like products

©2006 GS1 Canada8

GPC Bricks

• A Brick entity contains product types that can be characterised by the same set of attributes and provide granularity and global recognition

• Each brick is associated with up to 7 attributes that classify the grouping of the items.

• Each attribute has a set of acceptable values. Thus, each brick is supplied with a detailed definition of the types of products that are contained therein

• The attributes are purely for product classification purposes, so there is no brand, weight, size, etc. information

©2006 GS1 Canada9

GPC Bricks

• GPC brick as a nomenclature identifies a categoryincorporating trade items (GTINs) that

• Serve a common purpose

• Are processed to similar methods

• Used and applied in a similar manner

• Are of a similar form and material

• Share the same set of category attributes

• Designed to be shareable by other internal or external classification systems

• GPC can be the driver of category specific trade item attributes in catalogues

©2006 GS1 Canada10

For the above example

Segment Code = 50000000

Family Code = 50180000

Class Code = 50182100

Brick Code = 10000161 (Biscuits/Cookies (shelf stable))

CL

AS

SIF

ICA

TIO

N

IDENTIFICATION KEY

In GPC today…

©2006 GS1 Canada11

• Once the brick is identified, up to 7 attributes may be used

to describe the type of product• The attribute does NOT describe the product, the value associated with the attribute provides the information in a particular context• Therefore you can’t have one with out the other

In GPC today…

©2006 GS1 Canada12

GPC – Currently defined segments (http://www.gs1.org/services/gsmp/technical/gpc/)

• Arts/Crafts/Needlework

• Audio/Visual/Photography

• Automotive - Light Application [new]

• Baby Care

• Beauty/Personal Care/Hygiene

• Building Products [new]

• Camping

• Clothing

• Communications

• Computing

• Electrical Supplies [new]

• Food/Beverage/Tobacco (FBT)

• Footwear

• Fuels [new]

• Healthcare

• Home Appliances

• Homecare

• Household Kitchen Merchandise

• Household/Office Furniture/Furnishings

• Lawn/Garden Supplies

• Live Animals [new]

• Lubricants [new]

• Music

• Personal Accessories

• Pet Care/Food

• Plumbing/Heating/Ventilation/Air

Conditioning [new]

• Safety Protection - DIY

• Safety/Security/Surveillance [new]

• Sports Equipment

• Stationery/Occasional Supplies

• Textual/Printed/Reference Materials

• Tool Storage Workshop Aids

• Tools Equipment - Hand

• Tools Equipment - Power

• Toys/Games

• Cross Segment

• Combined Published Schema

United Nations Standard Productsand Services Code® (UNSPSC®)

©2006 GS1 Canada14

What is the UNSPSC®?

• “United Nations Standard Products and Services Code®”

• An open standard• A taxonomy of products and services• A practical business tool

©2006 GS1 Canada15

Open Standard

• Publicly available specifications • Not proprietary

• Available to all to read and implement

• No royalty or license fees for usage

• No restrictions on sharing codes with trading partners

• No lock-in to one commercial solution

• Do not discriminate or favor; level, neutral playing field

• Participation in development is open and transparent

• Decisions are made on a consensus basis

©2006 GS1 Canada16

Taxonomy

• A technique of classifying products and services bought and sold

• A hierarchical tree structure, which enables “drill down” and “roll up” analysis

• A practical tool, responsive to user needs• Use in Enterprise Resource Planning, e-Commerce,

Business Intelligence systems

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Example: Biology

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©2006 GS1 Canada18

Example: UNSPSC

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Advantages of UNSPSC®

• The UNSPSC is available in 10 languages:

• Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Portuguese and Spanish

• Standard codes eliminate ambiguity• Segments exist for

• raw materials

• industrial equipment

• components and supplies

• end-use products

• services• Comprehensive: over 20,000 commodity code categories• Responsive to the marketplace

©2006 GS1 Canada20

Advantages of UNSPSC®

• Avoid Expense of Developing Your Own Classification System

• Typical home-grown coding systems take a year or

more to develop – you can download the complete

UNSPSC® today

• Avoid duplicated effort, where every trading partner

codes differently

©2006 GS1 Canada21

UNSPSC® Design

• Hierarchical 4-level tree structure: Segment, Family, Class and Commodity

• Note: “Commodity” is not defined as bulk materials but in

the sense as any article of trade or commerce including capital equipment, high-value products, and professional services.

• Category titles are unambiguous and mutually exclusive

• Products appear in only one category; categories each have only have one parent

• Products are grouped according to dominant usage in world market

©2006 GS1 Canada22

UNSPSC® Components

• UNSPSC Code: 8 digits, e.g. 44103103

• Title: natural language text up to 120 characters

long, e.g. “Toner”

• Definition: free form text gives concise explanation

• Business Function: 2-digit codes for Rental or Lease, Maintenance or Repair, Manufacturer, Wholesale, Retail, Recycle, Installation (optional to use)

©2006 GS1 Canada23

UNSPSC® Code Structure

Segment 44000000 Office Equipment and Accessories and Supplies

Family 44100000 Office machines and their supplies and accessories

Class 44103100 Printer and facsimile and photocopier supplies

Commodity 44103103 Toner

44103103 - Toner

©2006 GS1 Canada24

UNSPSC® Segments

Family, Class and Commodity codes are arbitrary, and

reflect no logical sequence.

The 55 Segments are arranged in a logical sequence that reflects how value is progressively added to products

Office Equipment and Accessories and Supplies 44

©2006 GS1 Canada25

Value of Implementing the

UNSPSC®

• Automate gathering and analyzing

• Uniform, enterprise-wide view of spending

• “Roll up” analysis

• Centralize procurement function

• Collaboration with Customers

• Control maverick spending

• Product standardization = Reduced inventory

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Value for Suppliers

• Facilitate sales function

• Qualify as a Preferred supplier

• Speed new product introductions

• Facilitate globalization

• Collect consistent sales data

• Contract Compliance via Collaboration

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Realizing the Benefits

• Drill down - focus your on categories that

represent the most spend

• Roll up - identify ‘contractible groups’,

reduce the number of vendors

• Use with decision support tools

• Regular periodic reports, to monitor and alert

• Ad hoc, to identify new savings opportunities

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UNSPSC® Conclusion

• Manage spend to improve the financial health of your organization

• Rationalize vendors

• Standardize products

• Leverage volume to negotiate better pricing

• Improve operational efficiency of purchasing function

• Think about how to maximize benefits

GPC and UNSPSC®

Integration

©2006 GS1 Canada30

GPC & UNSPSC®

are Complementary

• GPC

• well-proven, robust business rules

• managed through Global Standard Management

Process (GSMP)

• the classification schema used in the GDSN by data

pools, retailers and suppliers

• UNSPSC®

• covers 55 segments, including products and services

• a globally recognized system

• visibility of spend analysis: cost-effective procurement optimization and exploitation of electronic commerce

capabilities

©2006 GS1 Canada31

What will Alignment look like?

©2006 GS1 Canada32

Vitamin Example: Integrated UNSPSC/GPC System Extension to Commodity Attributes and Product Attributes

©2006 GS1 Canada33

Integration Benefits

• Further improve the spend visibility and analysis• Optimize cost-effective procurement and strategic

sourcing

• Map products to existing internal and external classifications systems

• Extend classification system to commodity attributesand product attributes

• Improve decision making with better statistics and reporting

• Be linked to a broader global GS1 Standard package

©2006 GS1 Canada34

Integration Project Description

• Align the two schemas by integrating the GPC brick structure into the UNSPSC® Commodity level

• UNSPSC® hierarchy will serve as the primary basis

• GPC to provide necessary granularity for certain sectors

• Commodities (Bricks), defined attributes and attribute values

• Current GPC brick definitions will be preserved in the UNSPSC®

structure at the commodity level

• One-to-one mapping of GPC brick codes to new UNSPSC® commodity

codes

• Post integration, both code sets will be maintained

• Minimizes rework/conversion on the part of GPC user base

• Key Milestones

• Mapping work began in January 2007

• Completion of project in 2007

©2006 GS1 Canada35

Impact to the Community

• The ECCnet Registry will have an interim solution supporting both codes as optional data fields

• In order to support the Canadian Community and its

adoption of Global Data Synchronization

• Once the UNSPSC® and GPC codes are completely aligned and if the decision is made that both are no longer supported on the Global level, the ECCnet Registry will be adjusted accordingly

©2006 GS1 Canada36

For More Information

GSMP Technical webpage http://www.gs1.org/services/gsmp/technical/

Find out more about GPChttp://www.gs1.org/productssolutions/gdsn/gpc/

GPC Standardshttp://www.gs1.org/services/gsmp/technical/gpc/

UNSPSC®

http://www.unspsc.org/UNSPSC® Codeset Downloads

http://www.unspsc.org/Default.aspx?sid=41704UNSPSC® Introduction and Overview

http://www.unspsc.org/webseminar.asp

©2006 GS1 Canada37

Questions?