The role of C-products in providing customer service-refining the inventory policy according to customer-specific factors

An approach is provided for categorizing C-products on the basis of their significance for the business through their customer service effects. In the approach, C-products are considered significant for two types of service reasons: (1) C-products, which are mainly sold to the most important customers, and (2) C-products, which are mainly sold in connection with A-products and are necessary for making a complete order. These customer service-related aspects are combined with product-related variables such as demand volume and variation to categorize the products into distinct clusters for which different service policies can be exercised. A self-organizing map, which is a flexible tool for clustering problems, is used for creating product groups. The approach is illustrated with an application of a wholesale company in a constructing business. As a result of the analysis, the C-products are categorized as service products (with local availability policy), slow response products (centralized stock policy), and non-important products (potential ones to be discarded).