So, now, let’s understand what is MFCA.
MFCA consist of three main elements as shown in the figure below:
Let me describe each element in the followings:
Material refers to any raw material, auxiliary material, component, catalyzer, or part that is used to manufacture a product. Any material that does not become part of the final product is considered material loss. In any process, waste and resource loss occur in different steps of the process, including:
- Material loss during processing, defective products, impurities
- Materials remaining in manufacturing equipment following set-ups
- Auxiliary materials such as solvents, detergents to wash equipment, water
- Raw material that becomes unusable for any reason
MFCA traces all input materials that flow through production processes, and measures products and material loss (waste) in physical units using the following equation:
Input = Products + Material loss (waste)
The starting point of MFCA is to measure amount of material losses based on mass balance. The concept is illustrated in Figure 1. In this case, the amount of the material loss (30 ton) is calculated based on the amount of total input and products in a selected part of a process in which the inputs and outputs are quantified. This part of the process is defined as a quantity centre in MFCA (i.e., Material loss = Input – Products) as the figure below shows.
Concept of Material Balance
Decision-making in organizations typically involve financial considerations. MFCA supports this point by assigning a monetary value to material losses. In detail, MFCA allows organizations to see material losses as “products” rather than “wastes” even though they are non-marketable. This indicates that costs for both products and material losses are calculated in an equivalent manner. Therefore, all costs caused by and/or associated with the material flows entering and leaving a quantity centre must be quantified and assigned or allocated to those material flows
3. Cost Accounting
Under MFCA, the flows and stocks of materials within an organization are traced and quantified in physical units (e.g., mass, volume) and then assigned an associated cost. Under MFCA, four types of costs are quantified: material costs, system costs, energy costs, and waste management costs. Each cost is defined in the following:
- Material cost: cost for a substance that goes through a quantity centre (measurement unit of input and output for MFCA analysis). Typically, the purchase cost is used as material cost
- Energy cost: cost for energy sources such as electricity, fuels, steam, heat, compressed air
- System cost: cost incurred in the course of in-house handling of the material flows, excluding material cost, energy cost, and waste management cost
- Waste management cost: cost for handling material losses
We will describe more what MFCA is in the following blogs.
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 training 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.
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