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Approach to E-classification and E-tradability of complex industrial services

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 eChallenges e-2010 Conference Proceedings
Paul Cunningham and Miriam Cunningham (Eds)
IIMC International Information Management Corporation, 2010
ISBN: 978-1-905824-20-5

Approach to E-Classification and E-

Tradability of Complex Industrial Services
Maik HERFURTH, Peter WEISS
FZI Research Center for Information Technology,
Haid-und-Neu-Str. 10-14, 76131 Karlsruhe, Germany
Tel: +49 0721 9654 604, Fax: + 49 0721 9654 605, Email: {herfurth, weiss@fzi.de}
Abstract: Service procurement is still source of high costs to companies. Enterprise
information systems (such as enterprise resource planning (ERP) or procurement
systems, etc.) do not adequately support electronic procurement of industrial
services. Business processes suffer today from poor quality of underlying master
data in supportive information systems. This results in negative effects on transaction
and process costs. Observable shortfall lies in effective interoperability between IT
products and service descriptions. Information management systems do not take into
account the characteristics of service specific administrative processes which has
negative effects on process costs. In this paper we argue that e-classification of
services results in better, standardized data in service procurement processes, as
prerequisite for enhanced spend analysis and outsourcing decisions. In the paper we
will have a clear focus on industrial maintenance services.

Introduction
The universal trend in the area of supplier relationship management goes towards the
process cost reduction and compliance. Nowadays, the interest of the organizations is to
build flexible electronic processes that support and customize their business processes, at
the same time that they are able to adapt the enterprise to the constant market changes.
Service procurement processes are still a source of high costs to companies, and due to its
complex and heterogeneous purchasing processes, few companies up to now have tried to
support those processes via the application of web-based information systems [3].
E-Procurement system or Desktop Purchasing System have as its main benefit the
process efficiency improvement through the redesign of the procurement processes as well
as the automation of the operative purchasing tasks, leaving time for buyers to focus on the
strategy purchase activities as the negotiation and management of long term contracts [3].
Orders carried out manually and individually, by circumventing the purchase department,
frequently cause wrong deliveries and delays. Furthermore, existing potential to save costs
are thrown away through inefficient processes caused through repetitive inquiries for
delivery conditions, quantities and prices, as well as individually build up stock reserves in
workplace or small storage [4]. Automation requires e-catalogues which support searching
and purchasing of services. In turn this necessitates standardized, interoperable descriptions
and specifications of service items. Today this is still an unsolved problem for industrial
services such as repair or maintenance services. Such complex services are offered and
delivered in facility-oriented and product-related service industries. Services of this type
have intangible and tangible elements and are typically exchanged in interactive purchasing
processes (mainly caused by personalization and configuration of offered and ordered
services) where buyers and sellers are closely integrated [16]. More recently, manufacturing
companies are starting to offer product-related services to their customers [2]. Purchasing
of services is typically categorized as indirect Maintenance, Repair and Operation (MRO)

Copyright © 2010 The Authors www.eChallenges.org Page 1 of 8

goods and services. Business transactions are run by stand alone or integrated e-
procurement systems such as SAP Supplier Relationship Management (SAP SRM) in
support of procurement of indirect goods, which are solely involved in administrative tasks
and routine MRO. The procurement of industrial services is substantially different from or
even more difficult than the procurement of goods [5] [7]. Service procurement processes
have hardly data transfer standards, and few IT vendors provide specialized tools to support
this business process. Hence, there is a need to develop electronic data transfer models and
standards to foster the development and application of web-based information systems
during a service negotiation and buying process between companies and their suppliers [3].
This paper takes focus on two interrelated topics. First we look at the coding challenge
for industrial maintenance services. This comprises accurate description of service as
prerequisite of e-catalogue operations and related business transactions. We propose a
newly classification approach and structure of indirect MRO goods with clear focus on
industrial maintenance services. The latter delivers hands on examples to derive
requirements and evaluate our results. Developments described above create new forms of
businesses and results in an increase of business interactions and collaboration of business
partners building product-related service networks. Such service networks suffer from lack
of interoperability of IT products and business terminology including underlying business
objects and data. This results in the overburdening of purchasing departments and long
procurement times [4] and a flourish of maverick buying, which tricks installed spend
intelligence measures and tools. The latter hampers decision making, causes additional
expenditure and results in greater capital commitment. This shortfall in information
management can be explained through the absence of interoperable descriptions and
recognized classification systems. A key issue here it the missing of an unambiguous
format for the description and specification of industrial services based on a clear
classification structure. Therefore the paper looks into the e-classification of industrial
maintenance services. Existing classification systems and approaches are analyzed and
compared. Finally, we propose an approach which extends state-of-the-art classification
systems and which will be implemented by the international classification system eCl@ss
[8]. eCl@ss shows to have potential to leverage interoperable product and service
descriptions and in this way catalyses a new generation of e-commerce operations and
applications.

Achieving E-Tradeability of Industrial Services

Subsequently, we look at current shortfall in service procurement processes and systems.
We will identify and analyze underlying problems and will derive requirements how to
achieve e-tradeability of industrial services.
Industrial services make up a large part of many industrial companies purchase budget,
but for the supplier these services often make up a substantial proportion on the company’s
profit [9]. Companies today tend to outsource industrial maintenance services and focus on
benchmarks with the market to recognize potentials of cost savings in administrative
processes and their organization. Classification of services is the prerequisite for spend
intelligence tools and to achieve better transparency. This results in improved make-or-buy
decisions based on high quality meta data and key figures aggregated from IT-Systems such
as ERP or e-catalogue systems and platforms. In this way, companies achieve an “increase
in savings through the use of contract pricing and influence policies and programs for spend
categories already under management” [3]. Hayse and Wheelwright [11] provide a
classification scheme by using a five-by-five matrix for the nature of service offering,
corresponding to the product, relative to the service system structure, corresponding to the
process. To characterize services, three different dimensions have to be described: the
potential dimension, the process dimension and the result dimension. Services of the

Copyright © 2010 The Authors www.eChallenges.org Page 2 of 8

potential dimension are potentials and capabilities of a service supplier [12]. Services
characterized by the process dimension are the fulfilment of demand of serving processes of
third party. These processes require a synchronized contact between service suppliers and
customers [13]. Industrial services can typically been divided into two broad categories: (1)
maintenance and repair services, equipment repair, janitorial services, and (2) business
advisor services [14]. Industrial services can again be divided into elementary services,
intermediate services and intricate services. Elementary services are purchased frequently
and aren’t essential to the industrial consumers primary functions, have low a complexity
and do not require formalized service providers. Intermediate services require a more
elaborate set of services components and the service provider must become more directly
involved in supply of the services. Intricate services require the most intensive level of
service and customer attention and are highly complex and have a low replacement rate
[15].

E-Classification of Services
“Information systems have to put forward classification libraries and help tools to assist
users through the spend data classification process” [3]. Electronic catalogue systems tend
to support the product classification process. Buyers and suppliers can use an available
classification library in which the acquired knowledge base is stored and maintained [3].
Lee et al. [16] address the classification and strategic management of services in e-
commerce. The classification of services with a common coding scheme facilitates
commerce and procurement between buyers and sellers and is becoming mandatory in the
new era of electronic commerce. Classification codes can be involved in most e-
procurement transactions like searching of products and services in the internet, ordering
product and services directly from suppliers product e-catalogues, approval for purchases
before order is sent, given the standard coding match, receiving of goods, invoice
processing and payment transfer, use of trading partners as preferred suppliers and
document archiving which suppliers buyer’s will have access to [30]. Most classification
systems are based on a hierarchical structure of classes to describe product types or service
types. Attributes can be assigned to classes. The most know standard classification systems
are eCl@ss1, ETIM2, UNSPSC3, RosettaNet4, proficl@ss5, bau:class6, GPC7 and eOTD8. As
already highlighted, standardized product classification systems play a major role for
automated business transaction. Several attempts at classifying services have already made
by researchers: [25][26][27][28][14][29]. But the classification of industrial services has
not received the same level of attention as the categorization of consumer services.
[31] classify services into the service types professional service (highly customized,
process oriented transactions), mass service (product oriented transactions with little
contact and customization), service shops and service factory (Service oriented
manufacturing). The most popular architecture for such descriptive languages for products
and services is the combination of three components classes, attribute library and class-
specific attribute lists. Standardized product classification systems like eCl@ss play a
major role in business related communications between systems. They allow for the
unambiguous and context-free encoding of products and services. Especially catalog data
exchange and catalog data integration are in focus because of multiple sources of product
1
http://www.eclass.de
2
http://www.etim.org
3
http://www.unspsc.org
4
http://www.rosettanet.org
5
http://www.proficlass.de
6
http://www.baustoffkatalog.com
7
http://www. gs1.org/gdsn/gpc
8
http://www.

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data [32][33][34]. The context of B2B applications requires an effective communication
between machines. Semantic interoperability between information systems is crucial.
Therefore two factors contribute: a common language to specify the resources and a shared
knowledge model and vocabulary between different systems. The two factors can drilled
down to syntactic and semantic dimensions. We focus on the semantic dimension which is
related to the knowledge model and vocabulary used by the systems. Knowledge models for
e-procurement and e-commerce applications are difficult and expensive to build. Standard
classification systems like eCl@ss, NAICS, UNSPSC or GPC ease the information
exchange between customers and suppliers, by providing a framework to identify products
and services in global markets.
Identification codes won’t serve the purpose of supply line discovery, spend analysis or
product awareness. They identify products and services in an unambiguous ways with
unique key codes. Therefore they create a one-to-one correspondence between the symbol
and item. While their purpose focuses more on tracking and record keeping, classification
codes indicate the relation of item to other items. Classification codes are structured
hierarchically and show classes and subclasses in which the service or product item is a
member. Classification codes focus on finding goods and services for their analysis. A
classification taxonomy provides roll up and drill-down and organizes the available goods
and services into logical categories [30]. Most e-catalogues are XML-based.

Classification of Industrial Maintenance Services

Industry demands standardized description of industrial services. To date there is no
standardized description and format for industrial services. This paper present the results of
our research on the new classification structure for industrial maintenance services of
eCl@ss. “The database, which is populated with the organization’s classification system
and the combination of supplier’s product descriptions and its respective classification
codes, is integrated with the search engine of the e-catalogue platform” [3]. “Material
taxonomy library can support the classification of similar product data in the future, based
on previous product classifications, increasing so the coherence of company’s content. The
library enables users to search for the most appropriate material group for their products
and services, using the search technology to rank the respective codes per relevance,
applying a fuzzy approach to statistically combine different factors with different priority
levels to define effectively the statistical relevance of a query result” [3].

New Data Model for eCl@ss

The previous data model of eCl@ss fits the description of simple and standardized
products. But for more complex, configurable products and services, it is reaching its limits.
Therefore a new data model will be introduced (see figure 1). The new data model is
oriented at the standards ISO 13584 [43] and IEC 61360 [44][45][46][47]. The most
important changes are new dynamic elements cardinality and polymorphism. The new data
model for the classification of products and services will be presented. There is a high
demand after harmonization of class structures and attribute lists of classes. The shown data
model allows the implementation of hierarchical attribute lists. Basic properties of all
corresponding classes should be considered as well as additional specific attribute
properties for specific classes. Furthermore, the data model supports an improved
application and integration of eCl@ss content class structure, buzzwords, attributes, values,
value list and attribute lists.

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 Figure 1: New Data Model of eCl@ss
The idea of an attribute list combines application classes, aspects and blocks.
Hierarchical attribute list being connected by an inheritance structure support
harmonization and reduce the amount of characteristics. The model differentiates between
the categorization class and characterization class [88]. The new data model offers more
flexibility and dynamic characteristics for the classification of services. Attribute blocks can
be dynamically linked and offer different kind of views. In terms of industrial maintenance
service, the views of the collaborative service value network are relevant: service supplier
and service customer. Specific attributes can be applied for different perspectives. Other
important perspectives are ecological attributes with green factors for services. Such
attributes can be defined in an attribute blocks and be selected by a specific view. Another
attribute block can be attributes for the productivity of services. In the future, we will define
such attributes which can be applied for the classification of services.

New Classification Structure for Industrial Maintenance Services

Since services have been mostly neglected in terms of classification, it was time for a new
approach for the classification of services.
As being involved in the classification process of services, we recommended to break
open the mixed structure of eCl@ss to eliminate the talking keys. The high demand of
services on the market and the advancing tertiarization implies the need of a clear service
structure for data exchange and service description. Therefore within the next upcoming
new releases of eCl@ss, new own segments for services will be introduced.
Service will get the same importance in terms of structural description as products
already have. Like products, eCl@ss will divide up services depending on their class of
business. We developed the first part of the classification of industrial services:
maintenance services. The new classification structure with an example of cardinality of
attribute blocks is presented in figure 2.

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 Classification System
eCl@ss

Segment :
Industrial MaintenanceServices 25- 00-00-00

Main Group :
...
Building 25-22-00-00 ...
Categorization Class

Group:
Doors and Portals 25-22-31-00 ...

... ...
...
Commodity Class : 25-22-31-01
Service

Application Class Application Class

Attribute 1 Attribute 1
Attribute Block Attribute Block

Reference Attribute Attribute 2 Attribute 2 Reference Attribute

Attribute a Attribute a
Reference Attribute Reference Attribute

Attribute b Attribute b

Attribute 4 Attribute 4
Attribute c Attribute c

Supplier Security Kindof Material Pressure Price Tax Tarif

Version Code Surface Units

Aspect Administrative Aspect Administrative Aspect Technical Aspect Technical Aspect Comercial Aspekt Commercial
General Specific FACILITY MGMT General Specific VENTIL General Specific EXPORT

Characterization Class

Figure 2: Classification Structure for industrial Maintenance Services and Aspects

We introduce the new segment industrial maintenance services and the new
hierarchical structure. The next levels main group and group will be defined by object-
oriented classes. Therefore existing classes on the hierarchical levels one to three for
products and materials will be examined and clustered in logically structured layers. The
object orientation for the main group level is focusing on a logical aggregation on object
families with industrial maintenance areas like building, energy, machines e.g.. The next
level groups focuses on interrelated commodity families within the main group. The
content of this level is also a new clustering of existing groups and commodity classes from
existing product classes. The last hierarchy level commodity classes defines the specific
characteristics of industrial maintenance services and is oriented on the existing standards
for industrial maintenance services DIN 31051 [48] und DIN 13306 [49]: maintenance,
inspection, service and advancement.
We also develop und propose new attributes and characteristic values. One of the main
characteristics of industrial services is the interrelation with physical products like material.
Industrial maintenance services belong to product-service systems (PSS) as being focused
on a mix of both products and services, in comparison to the traditional focus on products.
The research has focused on a PSS as system comprising tangibles (the products) and
intangibles (the services) in combination for fulfilling specific customer needs. The
research has shown that manufacturing firms are more amenable to producing results, rather
than solely products as specific artefacts, and that consumers are more amenable to
consuming such results. This research has identified three classes of PSS: product oriented
PSS, use oriented PSS and result oriented PSS. Industrial maintenance services are product
oriented where ownership of the tangible product is transferred to the consumer, but
additional services, such as maintenance contracts, are provided [50].
To describe this hybrid character of industrial maintenance services, we include
material and product relations in our attribute lists. Figure 3 shows an extract of our service
attribute structure. For the new classification structure for industrial maintenance services,
we define general attributes lists for all classified industrial services and specific attribute
lists for industrial maintenance service.

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 Header Data Object Relation Locality

Supplier name Classification key Accessibility

Service text Classification system Zone

Unit Classification system version Working area

Measure Internal oject name

Supplier ID Object adress

Object type description

Object manufacturer /supplier

Requests for Suppliers
General Attributes
Times Specification of Services
Conformity of permission

Preliminary lead time GAEB key

Zertificates

Execution time Main group GAEB

Requests for services Execution period Title GAEB

Cycle GAEB order number

Personal qualification
Reaction time Disposal of material
Man power

Related Object Related material

Object ID Material ID

Supplier ID Supplier ID

Supplier name Supplier name

Supplier adress Supplier adress

Object name Material name

Specific Attributes

Object specification Material specification

Description

Short text

Long text

Figure 3: General and Specific Attribute Lists for Industrial Maintenance Services
Due to the dynamic data structure for the new data model and the new concepts of
polymorphism, cardinality and aspects, attributes can be individually applied to the
classified services. General attributes will be inherited by all classified elements, specific
attributes can be optionally applied.

Summary and Conclusions

The paper presented the results of a standardization endeavor of eCl@ss for industrial
maintenance services. We proposed an approach to e-classification which we see as an
important milestone facilitating e-tradeability of complex services.
We focused on industrial maintenance services which are seen as one of the biggest and
fastest growing business segments in industry during last decade. Nevertheless, no attempt
has yet been made or shown successful to increase transparency and to bring techniques and
solutions from material procurement to the service field. The market is characterized by
individual stand alone solutions with no or only minor standardization potential. At this
stage, to our knowledge no holistic attempt has been made to develop a standardized,
integrated information management to support operation of service procurement processes
across a collaborative service value chain. The collaborative perspective shows to be
important to exploit the hidden potential of cost savings through consistent information
management along service processes from planning, over purchasing, delivery and activity

Copyright © 2010 The Authors www.eChallenges.org Page 7 of 8

 recording to billing. According to recent surveys, increasing transparency and efficiency on
the service sector becomes a major challenges and top priority for CIO and ICT managers
during next years. We have presented the foundations for electronic specifications and
descriptions of complex services to enhance searchability by considering and integrating
characteristics and variables of online goods. Next steps of our research will foresee to
evaluate the results by developing concrete applications scenario and use cases to be
integrated and run as reference solutions in two commercial e-procurement systems.

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