What are the three types of performance benchmarking Which t

What are the three types of performance benchmarking? Which type is most commonly used by the purchasing function?

Solution

The first type is strategic benchmarking. This involves a comparison of one firm’s market strategies against those of another. Strategic benchmarking usually involves comparisons against leading competitors, allowing a firm to gain an in-depth understanding of their market strategies.

The second type of benchmarking is operational benchmarking; a process that the purchasing functions follows when it performs benchmarking comparisons. Firms should benchmark functional activities that provide the greatest return over time.

The third type of benchmarking is support-activity benchmarking. During this process, support functions within an organization demonstrate their cost-effectiveness against external providers of the same support service or activity.