In the context of a reduction in income of population, the increase in prices will have an extremely negative impact on sales volumes-Ildar Fayzullin
The expert also added that the weakening of the ruble has an impact on the growth of the cost of production, since a number of packaging and components are purchased for foreign currency.
‘Labeling requires significant costs, so, of course, its implementation will affect the cost and price growth. We will see how much and when prices will rise during its implementation. Preliminarily, only due to the code fee (60 kopecks including VAT), the price for the final buyer will increase by about 1 ruble. Also, the price will be affected by tens of millions of expenses for equipment and more expensive packaging, to which Data Matrix codes will be applied,’ said Ildar Fayzullin.
As for the impact of price increase on changes in production volumes, according to the expert, these categories always depend on each other.
‘The higher the price, the lower the volume under the same conditions. Now when real incomes are falling in Russia for several years, and in the face of the pandemic, the price increase will negatively affect sales volume,’ said General Director of Ufa city dairy plant
According to Ildar Fayzullin, to solve these problems, it is necessary to optimize production, which is implemented by improving the quality of finished products and reducing overall costs.
‘The dairy market is a mature, highly competitive market. Therefore, for example, it is not possible to optimize only by increasing the turnover of products. We need to take a comprehensive approach. It is necessary not to lose momentum, and better to increase it, to reduce operational, that is, everyday expenses, and to manage inventory more efficiently,’ Ildar Fayzullin said.
He believes that Economic Manufacturing is a good option for such a task. This concept eliminates processes that lead to additional costs. The expert noted that this model of production optimization has been successfully implemented for several years and is working at Ufa city dairy plant.