Who gets how much? Customer segmentation during shortages

Supply chain disruptions can lead to shortages. To manage this risk, companies often adopt a customer segmentation strategy to prioritize customers when confirming orders. To protect the limited supply for important customers, strategic segments are created, where some segments are given priority at the expense of other segments. In enterprise resource planning (ERP) software, this process is behind the scenes and automated, meaning that students do not have the opportunity to grasp the logic and process involved. To extend student knowledge in this area, we developed an exercise through which students can learn the underlying rationale behind the customer segmentation strategy. In the exercise, students prioritize orders from current and new customers based on the customer segment. The results of a survey on this exercise provided evidence of student learning. Modeling the process in spreadsheets helps students gain knowledge and skills in automated backorder processing in ERP systems.