Department of Defense logistics activities are under increasing pressure to reduce their cost of operations. Defense Logistics Agency's response to this challenge is to reduce costs through competition--16 of 22 Defense Distribution Depots will be competed in the near future. Defense Distribution Depot San Diego (DDDC), facing this competition, must assess its relative competitiveness with respect to commercial industry. However, DDDC lacks performance metrics and measurement methods necessary to effectively measure its performance for comparison. The purpose of our thesis is threefold: to identify performance measures, measurement methods, and uses of performance measures by leaders in the physical distribution industry; to determine the depot's competitive position by quantifying the gap in performance using the performance metrics identified; and to identify the qualitative factors contributing to the gap in performance between the depot and commercial firms. We employ benchmarking methodology to argue that there is a significant gap in performance between DDDC and commercial distribution firms. We quantify the gap and discuss the qualitative factors contributing to it. We conclude with recommended productivity performance indicators for implementation at DDDC.