Benchmarking is measuring a company's products, services, or processes against other leading companies to determine how to improve. There are three main types of benchmarking: strategic, performance, and process. The benchmarking process involves planning what to measure, collecting data from other organizations, analyzing the data to find performance gaps, developing an improvement plan, implementing changes, and monitoring results over time. While benchmarking helps measure operational efficiency, its main limitation is that it does not fully measure overall organizational efficiency. The key advantages are identifying gaps, learning from successful companies, enabling change, and creating a need for improvement.