【MFCA Concept Basic -2】How is MFCA is different from conventional way of thinking/approach?

So How is MFCA different from conventional way of thinking/approach?

Difference between MFCA and Conventional Way of Thinking
One key difference is how you recognize the cost MFCA represents a different way of management accounting. In conventional cost accounting, the data is used to determine whether the incurred costs are recovered from sales. It does not require determining whether material is transformed into products, or disposed as waste. In conventional accounting, even if waste is recognized in terms of quantity, the costs to produce ‘material losses’ are included as part of the total output cost.

On the other hand, MFCA, as explained before, focuses on identifying and differentiating between the costs associated with ‘products’ and ‘material losses’. In this way ‘material loss’ is evaluated as an economic loss which encourages the management to search for ways to reduce material losses and improve business efficiency. The figure below shows the difference between MFCA and Conventional Accounting.


The differences between MFCA and conventional accounting do not mean MFCA cannot be applied to any organization which uses materials and energy. 

I will write more about MFCA basic concept and its implementation approach.

Hiroshi Tachikawa, Managing director of Propharm Japan Co., LTd.

Mr. Tachikawa has been providing MFCA-related consulting and environmental risk management in various Asian countries for more than 10 years. In addition, Mr. Tachikawa has been providing MFCA-related trainings to more than 1,500 participants. The service contributed to higher performance in productivity, quality and environment for a number of Japanese and overseas companies in wide-ranging industries from manufacturing to service industries. Through the MFCA projects in Asia, cost-reduction amount reached more than USD 1,000,000. In addition, he has been leading the international standardization of Material Flow Cost Accounting (ISO 14051 and ISO 14052) as a technical expert for Japan and Assistant Secretary for the international standardization group.

For any inquiries related to MFCA, please do not hesitate to contact us at “info@propharm.jp”