Benchmarking is a critical aspect of comprehensive performance measurement. Many companies are adopting benchmarking as a technique to compare their operations to those of both competitors and leading firms in related and non-related industries. Benchmarking is also used in important strategic areas as a tool to calibrate logistics operations.
Most of the firms use the following types of Benchmarking tools:
1.       Published Logistics Data: This method uses existing data that are published in various periodicals and university researchers. This method of data is easily obtainable and is cheaper to obtain. But the information got in this means is normally too general and may not be tailor-made for the firm’s exact problems. Since this information is available in public, it does not offer a real competitive advantage.
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2. Benchmark against noncompetitive firms: In this method a noncompetitive firm in the related industry is benchmarked. This is done by studying and reviewing the other firms’ measures, practices and processes to develop insights that will improve performance. The firm that is chosen to benchmark might be in the same industry but will be operating in a different market.
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3.       Alliance of Organisations: In this method, an alliance is formed between two organizations that systematically share benchmark data on a regular basis. These kinds of alliances require more effort to maintain but usually provide substantially better information than the preceding two methods.
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