Material flow cost accounting: Significance and practical approach

Abstract

Manufacturers and other businesses are being placed under increasing pressure to achieve higher productivity with reduced environmental impacts. Material Flow Cost Accounting (MFCA), one of the major tools of environmentalmanagement accounting, is considered to be an effective approach to meet such needs. Being recognized as key approach for sustainability, MFCA was internationally standardized to be ISO 14051 in September 2011. MFCA promotes increased transparency of material use practices through the development of a material flow model that traces and quantifies the flows and stocks of materials within an organization in physical and monetary units. This data can be used to seek opportunities to reduce material use and/or material losses, improve efficient uses of material and energy, and reduce adverse environmental impacts and associated costs. This chapter explains detailed steps for MFCA implementation and shows actual case examples. Furthermore, MFCA's impact is not limited to a single entity. MFCA can be applied to the supply chain where material wastage at one organization is occasionally sourced from suppliers. Impact on supply chain is also described in this chapter.