LDB's pre-privatization survey found most customers happy with system

Government pushed doomed privatization process despite current Liquor Distribution Branch keeping most B.C. wholesale customers satisfied

Two years before the Liquor Distribution Branch's (LDB) warehousing and distribution was put on the block for privatization, an external survey found widespread satisfaction from wholesale customers, Business in Vancouver has discovered.

The Corporate Insights report, commissioned by LDB, found it was "meeting or exceeding customer expectations for 86% of its wholesale customers."

The report, which analyzed results of the July 2010 Wholesale Customer Survey, was included in more than 2,800 pages of documents released November 14 to BIV via Freedom of Information (FOI) from the Virtual Documents Room online library for bidders.

The controversial privatization was cancelled prematurely on September 27 when the BC Government and Service Employees' Union reached a new agreement. The government has offered no detailed explanation why it cancelled the privatization before shortlisted bidders ContainerWorld, Exel, Kuehne + Nagel and Metro Supply Chain Group could make final presentations.

Corporate Insights said LDB was exceeding 12% of wholesale customer expectations, meeting expectations for 74% and falling short of 14%. Ratings had improved since the previous survey in 2008. The weakest rating remained flexibility toward customer requirements.

"There are still 22% who find you poor or fair in this area," said the report. "This is all part of the ongoing process of shifting from a process-driven organization to a customer-driven organization."

Corporate Insights sent the survey to 2,848 LDB customers and received 425 in return – a 15% response rate that was 4% better than in 2008. The results, it said, were accurate with plus or minus 4.4%, 19 times out of 20. Licensee retail stores were 39% of the sample, restaurants 24% and pubs 19%.

Product-ordering was deemed good or excellent by 79% of respondents, with excellent ratings jumping 10% to 24% since the 2008 survey. The fair and poor ratings decreased to 7% in 2010 from 20% in 2008.

"By type of business, restaurants gave slightly lower ratings with 65% offering a rating of good or excellent. All other business types offered good or excellent ratings of 80% or higher."

Product ordering staff was given an 81% good or excellent rating.

"Staff courtesy, availability, responsiveness, listening ability and clear communication had the highest good to excellent ratings, while those involving product knowledge and understanding of specific needs were rated slightly lower."

While 76% of respondents rated the overall performance of the product delivery process as good or excellent, "hotels and restaurants were more critical than the other industry groups measured, with overall ratings of 68% and 67% [respectively]."

The number of respondents reporting complaints fell from 41% in 2008 to 32%.

Meanwhile, the FOI records reveal that the 508 distribution staff in Vancouver and Kamloops had an average 10.6 years of service and were paid $21.26 per hour. A document explains that the fully loaded benefits rate to be applied to labour wage rates was 27%, which included provincial and federal pension, employment insurance, extended medical and dental, group life insurance and WorkSafeBC.

LDB sales rose 2.8% to $2.89 billion for the year ended March 31, 2012, and it reported a profit of $911.1 million.

The government was criticized for not publishing a business plan to justify the privatization.

Documents obtained by BIV showed that Exel contracted BC Liberal Party-connected lobbyists since 2005 with the aim of driving the privatization of the LDB.

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