Best Practice of MRO Data Classification

 To make spend analysis much easier and procurement processes more efficient, usually companies often implement and maintain a product group also known as a commodity classification system, which is applied to each product that is purchased. The use of such a system ultimately facilitates easy communication, commerce, and compliance between buyers and the company.

The classification systems available are from internationally recognized providers like UNSPSC and eCl@ss, and industry-specific national providers such as Shell MESC designed exclusively for the Oil & Gas industry. There are a few end-users and service providers like IMA Ltd who have developed their own internal classification system depending on industry specifications, business processes, and subject matter expertise. Although each system has its own unique structure and advantages, all the systems have been designed with one common purpose and that is to accurately classify MRO products and services for efficient spend analysis, procurement, and e-commerce.

Let’s take a glance at a couple of of the foremost common industry mro master data management systems.

1. UNSPSC

The United Nations Standard Products and Services Code® (UNSPSC) is an open, global, multi-sector standard to efficiently and accurately classify products and services. UNSPSC is one of the foremost common and widely used classification systems for MRO data classification for products and services. It enables enterprise expense visibility and procurement efficiency. The UNSPSC code structure is comprised of the following5 levels:

• Segment
• Family
• Class
• Commodity
• Business Function

When working with UNSPSC, IMA Ltd. specifically assigns the 8-digit UNSPSC code according to the fourth level of the commodity.

eCl@ss

eCl@ss is another internationally recognized cross-industry MRO data classification system. It has 41,000 product classes, roughly 17,000 properties, and eCl@ss covers the bulk of traded goods and services. eCl@ss also utilizes an 8-digit code structure which is comprised of the following elements:

• Segments
• Main Groups
• Groups
• Commodity Classes

IMA Product Group Classification

The IMA Product Classification System is an internally developed architectural graph that is designed as an industry best-practice standard based on project experience and subject matter expertise. Unlike UNSPSC, eCl@ss, and another complex, cross-industry MRO data classification systems, the IMA Product Group MRO data Classification system focuses only on MRO products and services. The IMA Product Group MRO Data Classification system provides a high-level 4-digit classification code based which is based on a simple category and sub-category graph. This is limited to all the 7 encompassing MRO data classification and each graph has approximately 20 sub-categories. IMA uses fewer codes to encompass all MRO products and services data classification to reduce errors. This enables efficient spend analysis and cost-effective procurement. Here are a few examples showing how different systems generate MRO data classification for the same product, UNSPSC Ball Bearing: 6205-2RS, eCL@ss Ball Bearings – 31171504, Deep Groove Ball Bearing – 23050801, IMA Product Group: Ball Bearings – 0101

Conclusion for MRO Data Classification System

In most cases, companies have neglected to implement and maintain a standard classification system as they do not have adequate resources, time, and quality data. Although it looks very easy to assign and maintain a basic product code, actually selecting the correct code from an extensive MRO data classification list is a time-consuming process and requires strong product knowledge. It is indeed very obvious that developing an internal classification standard rather than using a pre-existing system can take an even longer time and more resources. For many organizations, it is more comfortable, effective, and affordable to implement a pre-existing, proven MRO Data Classification system through a third-party service provider. A quality service provider is well prepared with their internal tools and expertise to classify and validate MRO data. This eventually leads to spending less time trying to classify items yourself and saves more time and money.