Material Flow Cost Accounting
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Material flow cost accounting (MFCA) is a
management Management (or managing) is the administration of organizations, whether businesses, nonprofit organizations, or a Government agency, government bodies through business administration, Nonprofit studies, nonprofit management, or the political s ...
tool that assists organizations in better understanding the potential
environmental Environment most often refers to: __NOTOC__ * Natural environment, referring respectively to all living and non-living things occurring naturally and the physical and biological factors along with their chemical interactions that affect an organism ...
and
financial Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...
consequences of their material and energy practices and seeks to improve them via changes in those practices. It does so by assessing the physical material flows in a company or a supply chain and assign adequate associated costs to these flows.


History

The method was developed in
Germany Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...
in the 1980s and is related to approaches such as eco balances, flow cost accounting and "Reststoffkostenrechnung". The method became a huge success in
Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
in the 2000s. By the year 2010 up to 300 companies had applied the MFCA approach, which was highly supported by the Japanese government. In 2011 the
International Organization for Standardization The International Organization for Standardization (ISO ; ; ) is an independent, non-governmental, international standard development organization composed of representatives from the national standards organizations of member countries. M ...
(ISO) published a norm on MFCA (i.e. EN ISO 14051:2011). In 2020 an analysis of 73 case studies was made about the experiences companies have made when applying MFCA including success factors and obstacles.


Objective and principles

The aim of MFCA is to enhance both environmental and
economic An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...
performance through improved material and energy use. Since 2011 a general framework for MFCA has been provided by the
ISO 14051 ISO 14051 is part of the ISO 14000 family of standards relating to environmental management codified by the International Organization for Standardization. The purpose of ISO 14051:2011 is to provide principles and generic guidelines on material fl ...
norm. In order to improve material and energy efficiency MFCA aims to: *Increasing transparency regarding material and energy flows and the respective costs *Supporting organizational decisions in areas such as process engineering,
production planning Production planning is the planning of Production (economics), production and manufacturing modules in a company or industry. It utilizes the resource allocation of activities of employees, raw material, materials and production capacity, in ord ...
,
quality control Quality control (QC) is a process by which entities review the quality of all factors involved in production. ISO 9000 defines quality control as "a part of quality management focused on fulfilling quality requirements". This approach plac ...
,
product design Product design is the process of creating new Product (business), products for businesses to sell to their customers. It involves the generation and development of ideas through a systematic process that leads to the creation of innovative products ...
and
supply chain management In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...
*Improving coordination and communication on material and energy use within organizations.


See also

*
Business process reengineering Business process re-engineering (BPR) is a business management strategy originally pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization. BPR aims to help organizations fund ...
*
Sustainable design Environmentally sustainable design (also called environmentally conscious design, eco-design, etc.) is the philosophy of designing physical objects, the built environment, and services to comply with the principles of ecological sustainability ...


References

{{reflist Environmental economics ISO standards