Material flow cost accounting (MFCA) is a
management
Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a government body. It is the art and science of managing resources of the business.
Management includes the activities ...
tool that assists organizations in better understanding the potential
environmental and
financial 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 (FRG),, is a country in Central Europe. It is the most populous member state of the European Union. Germany lies between the Baltic and North Sea to the north and the Alps to the sou ...
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 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 international standard development organization composed of representatives from the national standards organizations of member countries. Membership requirements are given in Ar ...
(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, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with t ...
performance through improved material and energy use.
Since 2011 a general framework for MFCA has been provided by the
ISO 14051 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,
quality control,
product design
Product design as a verb is to create a new Product (business), product to be sold by a business to its customers. A very broad coefficient and effective generation and development of ideas through a process that leads to new products. Thus, it is ...
and
supply chain management
In commerce, supply chain management (SCM) is the management of the flow of goods and services including all processes that transform raw materials into final products between businesses and locations. This can include the movement and sto ...
*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
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Environmental economics
ISO standards