Introduction of MFCA (Material Flow Cost Accounting)

Thanks to the application of Material Flow Cost Accounting, enterprise productivity and quality will be improved considerably.

"Material Flow Cost Accounting" model. this method which appeared in the 1990s in Germany helps to manage and optimize the use efficiency of raw materials so this approach has been applying widely in Japanese companies. MFCA method was converted into 14051:2011 standard by International Organization for Standardization.

According to MFCA, the energy stream is considered as a part of material flow cost.  There are some organizations that are not fully aware of the real loss.  This criterion aims at providing a tool with the aim of using: an integrated accounting perspective to minimize environmental impacts and financial costs.

Thanks to the application of Material Flow Cost Accounting, enterprise productivity and quality will be improved considerably. Illustrative picture

To apply MFCA successfully, enterprises need to equip general knowledge themselves:

Output data collection

Enterprises need to have some specific information and details concerning kinds of materials used for product manufacturing as well as raw materials like main materials, subsidiary materials, water and energy. Input materials are combined into one product but they partially convert into waste because its performance of material use is less than 100%.

Output data collection

Output results in process embrace products, non-product factors (waste, material loss) Waste is considered as a factor to reflect the performance of material use. If the number of output products are great in the same amount of input materials used,, which means the effectiveness of material use is high, in other words, the material loss is low.

The percentage of material loss (scrap) must be measured. Once this type of waste is gathered and its source is identified, preventive or recycling measures can be introduced.

MFCA's success depends on MFCA understanding of enterprises. Illustrative picture

Cost center

Cost center can cover one or more stages depending on the  amount of damaged materials at production base. Centers are used with the aim of calculate materials in unit of currency. According to existing production and management information, we can determine cost center.

Material balance

Materials going into cost center and away from cost center are balanced in MFCA. Therefore, input materials and output factors need confirming at each cost center. Materials lost or damaged can be useful for identifying their potentials and improving resources. For each cost center, the amount of input and output should be quantified in unit of artifacts. All units of artifact can be converted into a single standard unit (ex: kg) so that balancing materials can easily be done for each center.