【MFCA Concept Basic -4】 What is MFCA-2? and how can we implement MFCA-1?

Ok, we explore more on what is MFCA below.
In the previous blogs, we explained benefits of MFCA and its general concept.

Now the question is how to do MFCA calculation and how we can implement MFCA.
Below are our brief answers:

Following identification of a physical unit for material flow data, material costs, energy costs, and system costs are subsequently assigned or allocated to quantity centre outputs (i.e., products and material losses) based on the proportion of the material input that flows into product and material loss.

For example, as illustrated in the figure below, out of the 100 ton of material used, 70 ton flows into product and 30 ton flows into material loss. Thus, the material distribution percentages of 70% and 30% are used to allocate energy and system costs to the product and material loss, respectively. For waste management costs of $100,000, it is attributed to material loss, since the costs are caused solely by material losses. In the final analysis, the total cost of material losses in this example is $5,200,000. This cost is not separated but included in the cost of the product in the conventional costing; the cost for material loss is not considered except in MFCA.

 cost calculation

Figure MFCA evaluation in monetary unit

The resulting cost of the material loss can become an incentive for organizations and managers to reduce operation costs by reducing their material losses. MFCA can help organizations achieve simultaneous achievements of financial benefits and control of material losses (i.e., more effective resource use). Control of material losses lead to less extraction of natural resources which contributes to sustainability.
This is why MFCA can be used for a key driving tool for sustainability.

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.

For any inquiries related to MFCA, please do not hesitate to contact us at info@propharm.jp or call us at +81-(0)3-6328-3307