7 Steps of MCS Implementation

Overview of Material Flow Cost Accounting
What is Material Flow Cost Accounting (MFCA)?
Material Flow Cost Accounting (MFCA) is one of

the major tools of Environmental Management
Accounting (EMA). EMA is a set of procedures
used within corporations and other organisations
for linking environmental considerations with
economic pursuits. EMA covers not only the
monetary calculation regularly handled by
accounting, but also extends to the calculation of
materials on a physical basis.
Organisations seek management tools to link

the environment with the economy. MFCA is a
management tool, which promotes the efficient
use of materials more effectively, contributing to
reduction of emission (waste). MFCA provides a
clear picture of the problems, including invisible
ones. By solving the problems, we can reduce
waste generation, improve material productivity,
and reduce the cost at the same time.
MFCA is applicable to any organisations,

regardless of type, size, activities and location,
7 STEPS IN MFCA IMPLEMENTATION
and not only in developed countries but in

developing countries as well. Furthermore, the
application of MFCA does not always require
advanced computer-based information systems
as an information base. Especially in organisations
such as SMEs (Small and Medium-sized
Enterprises), simple spreadsheet calculations are
quite enough, or even just a calculator.
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2
Contents
MFCA Team Planning 3

Material Flow Planning 7
Data Collection 17
Cost Calculation 27
Material Flow Cost Matrix 45
Improvement Opportunities 49
MFCA Improvement Impacts 55
1 MFCA Team Planning
2 Material Flow Planning
3 Data Collection
4 Cost Calculation
5 Material Flow Cost Matrix
6 Improvement Opportunities
7 MFCA Improvement Impacts

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2
STEP ONE
MFCA Team Planning
A) Involvement of Management
B) Determination of Necessary Expertise
C) Establish MFCA Working Committee
geme
ana nt
M
mittee
Expert
Com
ng
ise
k i
r
Wo
MFCA TEAM PLANNING
|
Management Expertise Working Comittee M
A) Involvement of Management B) D
i. Assigning roles & responsibilities. i. F

(e.g. Establish MFCA working committee) O
p
ii. Providing resources.
ii. M
iii. Monitor progress and reviewing results. t
iv. Decide on improvement based on MFCA iii. P

results.
iv. W
a
e
i
Roles v. C
ii
Resources
vi. K
iii
Review
iv
Results
Q
iv
Imp
|
4
STEP ONE
Management Expertise Working Comittee
B) Determination of Necessary Expertise
i. Flow of material & energy use:

tee) Operational expertise from R&D,
purchasing and production.
ii. Material balance: Engineering,

ts. technical & relevant expertise.
FCA iii. Product reject: QC expertise.
iv. Waste management and environmental

aspects and impacts: Environmental
expertise.
v. Cost allocation: Accounting expertise.
vi. Kaizen: Related process owners.
i
ii R&D
Material
iii
QC vi
Kaizen
MFCA TEAM PLANNING
iv v
Impact Cost
|
5
Management Expertise Working Comittee
C) Establish MFCA Working Committee
i. Led by top management.
ii. Consists of various relevant expertise.
iii. May consists of relevant supplier

representative from production supply
chain.
i
Management
ii
Expertise
iii
Supplier
MFCA Project Leader
Secretary
Relevant Expertise KAIZEN Teams

|
Material Flow Planning
STEP TWO
A) Determine The Applicable Product
and Boundary
B) Determine The Time Period
C) Create The Material Flow Model
duct a
Pro unda nd
Bo ry
low
Time Pe
ate del
rial F
M Mo
rio
d
MATERIAL FLOW PLANNING
|
Product Boundary Time Period Material Flow Model P
A) Determine The Applicable Product D

and Boundary - 1 a
Product B
High material volume used
High disposal cost
Market tendency product
Product High Disposal

Cost
High Material
Volume Used
Market
Tendency
Product
|
8
Model Product Boundary Time Period Material Flow Model
Determine The Applicable Product
STEP TWO
and Boundary - 2
Boundary
Single process
Multiple process
Whole facility
Supply chain at the discretion of the

organisation
Boundary
Single
Process
Multiple Supply
Process Chain
Whole
Facility
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9
B) Determine The Time Period C) C
Full operation period or production lot
A week
A month
3 months
Half year
A year

Determine
The Time
Period
A Month A Week
3 Months
Half Year
A Year
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10
C) Create The Material Flow Model - 1
STEP TWO
t Visualise the material flow by listing
down all the input and output for all
processes within the set boundary.
Input materials:
> Part of product:
Raw materials, auxiliary, materials,
intermediate products.
> Not part of products:
Cleaning solvents, chemical catalysts.
Output waste / loss:

Air emission, wastewater, solid waste,
rejected product, recycled and so on.
Material
Flow Model
1
Visualise
Input Output
Materials Waste / Loss
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11
Create The Material Flow Model - 2 C
Documents to consider as reference

during preparation for input material
and output waste or losses
Process flow
Quantity plan
Environmental monitoring &

measurement list
Material
Flow Model
2
Documents
Process
Flow
Quantity
Plan
Monitoring &
Measurement
|
12
Create The Material Flow Model - 3
STEP TWO
Materials needed
l > Colour post-it notes
> Marker pens
> Paper (Large flip chart paper)
> Large work surface (Wall, table or floor)
Material
Flow Model
3
Colour
Post-It
Notes
Marker
Pens
Paper
Work
Surface
|MATERIAL FLOW PLANNING
13
Create The Material Flow Model - 4 C
Record each process with a marker pen

on a separate post-it note (Yellow).
Record each input material with a

marker pen on a separate post-it note
(Blue) for each process.
Record each output, waste or losses

with a marker pen on a separate post-it
note (Green or Pink) for each process.
Paste on paper according to process

flow.
Input Input Input

Material Material Material
Material
Flow Model Process Process Process
4 A B C
Output, Output, Output,

Waste or Waste or Waste or
Losses Losses Losses
|
14
Create The Material Flow Model - 5
STEP TWO
en When all items has been identified,
written on the post-it notes and pasted
on the large paper.
e Perform on-site verification to ensure all

the processes, input materials and
output waste or losses have been
accurately captured.
t-it
s. The post-it notes can be changed or
added accordingly as per findings from
on-site verification, if needed to
reflect the actual situation.
t
ial Material
Flow Model
5
ss Paste
On Paper
Perform
ut, On-Site
or
es On-Site
Verification
|
15
Product Boundary Time Period Material Flow Model
Initial Identification of Input,

Process, Output
On-Site Verification
Discussion and Verification

|
Data Collection
A) Establish Quantity Centre

B) Decide Physical Units To Be Used
C) Data Collection Methods
STEP THREE
D) Data Collection
tre Un
en U
i
ts ed
C
ity
To
s
Quant
Be
tion
Methectio
Coll
lec
od
ol
C s
n
Data
DATA COLLECTION
|
Quantity Physical Collection Data Q
Centre Units Methods Collection C
A) Establish Quantity Centre Exa
Transfer the material flow model

information into Material Balance
sheet.
Each process will be the quantity

centre which serves as the basis for
data collection activities.
Purpose of quantity centre is to

compare quantities of material inputs
to outputs to identify any significant
data gaps.
Any significant imbalance found,

investigate further.
ance Sheet
Bal
rial Da
t
te
aC
a
M
oll
ect
ion Activities
igate
est
Inv
Sig
ni
fic
ant
Data
Gaps
|
18
t
ts
Centre
Quantity
Input Output

Units
Process Material Mass (a) Product / WIP (b) Waste / Loss (c) Gap
(d)
Physical
Unit
Item Previous New Inventory Item Volume Unit Item Volume Unit b+c a-d
1 2 3 4
Methods
Collection

Data
Example of Material Balance Sheet - 1
Quantity Centre
Collection
DATA COLLECTION
19
|
STEP THREE
B) Decide Physical Units To Be Used Exa
To facilitate in measuring quantities of

material inputs to outputs so as to
identify any significant data gaps.
> Measurement units used should be

consistent / standardised unit
or
> Comparative conversion factors
Physical unit is selected based on type

of material.
> e.g. mass, length, number of pieces,

volume
ificant
Sign
tify aps Co
en ata G n
D
Id
sis
ten
t/S
tandardised
terial
f Ma
eo
Co
yp
T m
pa
rat
ive C
onversion
|
20
be
es,
pe
of
Centre
Quantity
Input Output

Units
Process Material Mass (a) Product / WIP (b) Waste / Loss (c) Gap
(d)
Physical
Unit
Item Previous New Inventory Item Volume Unit Item Volume Unit b+c a-d
5 6 7
Methods
Collection

Data
Example of Material Balance Sheet - 2

Collection
DATA COLLECTION
21
|
STEP THREE
C) Data Collection Methods Ma

Acc
Consider the man-hour vs accuracy
balance for data accuracy.
> Higher accuracy of the collected data

will result in higher cost (man-hour).
> Initial data collected based on

existing information.
(man-h
> If insufficient data, obtain data by and D
additional measurement or Acc

o
estimation based on material
balance figure.
s Accuracy
r v
ou
-H
an
Co
M
llec
ted D
ata
Data
tain
Ob
In
tia
i
lD
ata
Collected
|
22
Quantity Physical Collection Data
Centre Units Methods Collection
Man-Hour vs Accuracy Balance For Data

Accuracy
y
data
ur).
STEP THREE
High
Degree
Accuracy Data
Cost
(man-hours)
and Degree
of the
Accuracy
of Data Cost
Reasonable
Level
Low
Small Number of the established Quantity Centre Large
Source: Ministry of Economy, Trade and Industry, Japan (METI) (2005)

DATA COLLECTION
|
23
D) Data Collection Exa
Create a data compilation sheet based

on Material Balance Sheet for easy data
collection in production floor.
> Summarised the data compiled by

specified time period, category or
product and waste / losses.
Ma
a
te
at
eD
ria
l Ba
Summarised th
lance
Sheet fo
r Ea
sy
D
at
aC
olle
ction
Part (code)
|
24
y
ed
data
Part (code)
Day Date RMS Material Weight Cavity Shot Product Product Sample
Centre
Quantity
Mixing Mixing Material: Counter WIP Ng QA

Lot No. (Kg) (Pieces) (Pieces) (Pieces)
Units
Physical
Methods
Lot No. Start End Lot No. Weight Weight

Collection
Start Running. Material. End Material Runner

Time Time Purging (Kg)
(Kg)
Example of Data Compilation Sheet
Data
Collection
[ Injection Molding Process ]
DATA COLLECTION
25
|
STEP THREE
26
| 7 STEPS IN MFCA IMPLEMENTATION
Part Centre
Period Product
Quantity
Month Qth Start End Pcs Kg

(Kg) Running Running
Date Date
Units
Physical
Methods
Collection
Runner % Ng Kg % QA Kg % Purging % Total Total

(Kg) (Pcs) (Pcs) (Kg) Loss
Data
(Kg)
Example of Data Summary Sheet
Collection

Cost Calculation
A) Material Cost
B) Energy Cost
C) System Cost
D) Waste Management Cost
STEP FOUR
l E
a
ne
eri
rgy
Mat
as ent
Syst
W gem
te
em
a
Man
COST CALCULATION
|
27
Material Energy System Waste Management M
Cost Cost Cost Cost C
Cost Calculation Cos
Important: Translate physical units into En

monetary units to support co
decision-making. pr
Calculate directly from production data Tw

for each quantity centre.
If not possible, estimate from existing

data. f
Monetary Units
Production Data
Existing Data
|
28
Material Energy System Waste Management
Cost Cost Cost Cost
Cost Allocation Methods
o Energy costs, system costs and disposal

costs are commonly available for an entire
process or facility.
a Two steps procedure:
Step 1:
Allocation of process-wide or
facility-wide costs to different quantity
centre.
STEP FOUR
Step 2:
Allocation of quantity-centre costs to
products and material losses.
Energy Costs, System Costs

and Disposal Costs
STEP 1: Process-wide
or Facility-wide Costs
STEP 2: Products and

Material Losses
| COST CALCULATION
29
Cost Allocation Criteria Cos
Cost allocation criteria is based on material An

distribution percentage. be
ce
Cost assigned to positive products and
negative products (materials losses). Th
ou
If management decision is not consistent sy
distribute cost to processing. w
qu
Most appropriate allocation is based on
organisation decision: Historical cost,
standard cost, existing cost accounting
etc.
Material Distribution
Percentage
Positive Products and
Negative Products
Distribute to Processing
Historical, Standard
and Existing Cost
$
|
30
Cost Cost Cost Cost
Cost Carryover Between Quantity Centres
erial An output from one quantity centre

becomes the input for another quantity
centre.
The cost associated with the product

output (material costs, energy costs,
nt system costs) used to make the product
will be carried over as the input for next
quantity centre.
n
STEP FOUR
Output from One Quantity
Centre Becomes Input for
Another Quantity Centre
Material Costs, Energy Costs,

System Costs
n
nd
sing
$ $ $ $ $
| COST CALCULATION
31
32
Example of MFCA Cost Calculation Cost
Material
Quantity Centre - 1 (Molding)

Weight, kg % Materials (RM) Energy (RM) System (RM) Disposal (RM) Total
Cost
New inputs in QC 100 135 1,400 672 2,207

Energy
Inputs from previous QC 0 0 0 0 0
Product: 20 27 280 134 441

Cost
Plastic part 20 20% 27 280 134 441

System
Cost
Losses: 80 108 1,120 538 0 1,766
Purging (For recycling) 15 15 20 210 101 331
Runner 60 60 81 840 403 1,324
NG 5 5 7 70 34 110
Waste Management
Total 100 100% 135 1,400 672 0 2,207

l
C
p
b
C
C
M
A) M
Cost Cost Cost Cost
A) Material Cost
Cost for a substance that enters and / or

leaves a quantity centre.

negative products (materials losses)
based on each material distribution
percentage.
STEP FOUR
Cost for A Substance
Positive & Negative Products

| COST CALCULATION
33
34
Cost
Material
New material weight x material New material weight x material

unit cost (RM1.35 x 100kg) unit cost (RM2.50 x 5kg)
Example of Material Cost Calculation 2 7
Quantity Centre - 1 (Molding) Quantity Centre - 2 (Packing)
Cost
Energy
Weight, kg % Materials(RM) Weight, kg % Materials (RM)

New inputs in QC 100 135 New inputs in QC 5 6 13
1
Inputs from previous QC 20 27
Cost
Inputs from previous QC 0 0

System
Product: 20 27 Product: 25 40
Plastic part 3 20 4 20% 27 Plastic part 20 80% 7 27
Carton 7 5 20% 13
Cost
Losses: 80 108 Losses: 0 0

Purging (For recycling) 15 15% 20
Runner 60 60% 81
NG 5 5% 7
5
Waste Management
Total 100 100% 135 Total material cost x material 25 100% 40

proportion, % (RM135 x 20%)

c
c
C
S
S
B) E
n
b
C
C
C
M
Cost Cost Cost Cost
B) Energy Cost
Cost for electricity, fuel, steam, heat,

compressed air.
Step 1:
Cost allocation to different quantity
centre from whole facility cost.
Step 2:
negative products (materials losses)
based on material distribution percentage.
STEP FOUR
Cost for Electricity, Fuel, Steam,
Heat, Compressed Air
STEP 1: Cost Allocation

STEP 2: Cost Assigned

| COST CALCULATION
35
Step 1
Example of Energy Costs Allocation
Historical Data Cost (RM)
Annual energy cost 1,000,000

a) Molding machine 70% 700,000
b) Others processes 30% 300,000
(receiving, crushing, mixing, packing)
a) Molding machine x 10 units 10 70,000

(700,000 / 10)
bi) Other processes 10 30,000

(to support 10 molding machines) (300,000 / 10)
bii) Consist of 4 quantity centres 4 7,500

(receiving, crushing, mixing, packing) (30,000 / 4)
Annual Total wieght for target product, kg 5,000
a) Molding machine energy cost per kg = 14.00

(70,000 / 5,000)
b) Other Quantity Centre energy cost per kg = 1.50
(7,500 / 5,000)
|
36
M)
000)
1.50
000)
4.00
000
0 / 4)
500
/ 10)
000
/ 10)
000
000
000
000
Total material weight x energy cost New material weight x material
Step 2 allocation at step 1 (100kg x RM14.00) unit cost (25kg x RM1.50)
Cost
Example of Energy Cost Calculation 1 4

Material

Weight, kg % Energy (RM) Weight, kg % Energy (RM)
New inputs in QC 100 1,400 New inputs in QC 5 38
Cost
3
Energy
Inputs from previous QC 0 0 Inputs from previous QC 20 280

Plastic part 20 20% 280 Plastic part 20 80% 254
Cost
Carton 5 20% 64
System
Losses: 80 1,120 Losses: 0 0

Purging 15 15% 210
Cost
Runner (For recycling) 60 60% 840

NG 5 5% 70
2
Total 100 100% 1,400 Total energy cost x material 25 100% 318
proportion, % (1,400 x 20%)
Waste Management
COST CALCULATION
37
|
STEP FOUR
Syst
Co
Alternative Allocation Criteria For Energy Use Cost
m
10% Losses
100% - 61.2%
20%
= 38.8% St
15% Co
ce
Total Energy Use
Product St
90% x 80% x Co
85%
= 61.2% ne
ba
a) b) c)
Setup Material Machinery
shut down Inefficiency Inefficiency
Source: ISO 14051 Standard (2011)
38
Cost Cost Cost Cost
System Cost
Cost of labour, cost of depreciation and

maintenance, and cost of transportation.
61.2%
% Step 1:
Cost allocation to different quantity
centre from system cost estimation.
t Step 2:
80% x Cost assigned to positive products and
% negative products (materials losses)
based on material distribution percentage.
Cost of Labour, Depreciation and

Maintainance, and Transportation
STEP FOUR
STEP 1: Cost Allocation
STEP 2: Cost Assigned

| COST CALCULATION
39
40
Cost
Material
Step 1
Cost
Energy
kg - 5,000 (h)
Process Number Unit Number of Month Labour Labour
of Labour Machine Cost Cost per
Cost
Worker Cost / for kg

System
Month Process
Molding 2 RM1,400 1 12 RM33,600 RM6.72

(a) (b) (d) (e) (f) = (f) / (h)
Cost
axbxd

Example of System Costs Allocation
Annual Total Weight for Target Product,

Waste Management
Total material weight x system cost

C
M
Total material weight x system cost Total material weight x system cost
Step 2 allocation at step 1 (100kg x RM6.72) allocation at step 1 (25kg x RM0.58)
Cost
Example of System Cost Calculation 1 4

Material

Weight, kg % System (RM) Weight, kg % System (RM)
Cost
New inputs in QC 100 672 New inputs in QC 5 15

3
Energy
Inputs from previous QC 0 0 Inputs from previous QC 20 134

Plastic part 20 20% 134 Plastic part 20 80% 119
Cost
Carton 5 20% 30
System

Purging 15 15% 101
Cost
Runner (For recycling) 60 60% 403

NG 5 5% 34
2
Total 100 100% 672 Total system cost x material 25 100% 149
proportion, % (672 x 20%)
Waste Management
COST CALCULATION
41
|
STEP FOUR
Waste Management Cost
Cost of handling material losses in

quantity centre.
Cost only assigned to negative products

(materials losses).
Cost of Handling Material

Losses in Quantity Centre
Cost Only Assigned to

Negative Products
(Materials Losses)
|
42
ts
tre
ial
Total disposal cost for each
Example of Waste Management material (if any)
Cost
Cost Calculation 1
Material

Weight, kg % Disposal (RM) Weight, kg % Disposal (RM)
Cost
New inputs in QC 100 New inputs in QC 5

Energy
Inputs from previous QC 0 Inputs from previous QC 20

Product: 20 Product: 25
Cost
Plastic part 20 20% Plastic part 20 80%

System
Carton 5 20%
Purging 15 15%
Cost
Runner (For recycling) 60 60%

NG 5 5%
2
Total 100 100% 0 Direct distribute disposal for 25 100% 0
each material if any
Waste Management
COST CALCULATION
43
|
STEP FOUR
Cost Cost Cost Cost
Significance of Material Flow Cost

Accounting
MFCA focuses on emission (waste)

Profits is hidden in emission (waste)
MFCA finds out the hidden profit
Hidden Profit
A
MFC
|
44
Material Flow Cost Matrix
MATERIAL FLOW COST MATRIX
45
|
STEP FIVE
MFCA Data & Cost Calculation Material Flow Cost Matrix
MFCA data & cost calculation should be

summarised for easy interpretation and
further analysis.
Example of Material Flow Cost Matrix Sheet
Mass Costs (RM)
Kg Material Energy System Waste Total

Management
Total
Input
Positive
Product
(Product)
Negative
Product
(Waste/
Loss)
Total
Output
(Injection Molding Process)

SUMMARISED
DATA & COST
CALCULATION
|7 STEPS IN MFCA IMPLEMENTATION
Positive & Negative Product
Material (RM), Energy (RM),
System (RM), Waste (RM)
The material flow cost matrix provide the

cost proportion for positive product and
negative product at one glance.
It is used as a communication tools for
Management to support decision making.
Employees on the changes to be made to

reduce the negative product percentage.
STEP FIVE
POSITIVE
PRODUCT
AND
NEGATIVE
MATERIAL FLOW COST MATRIX
PRODUCT
|
Positive & Negative Product
Material (RM), Energy (RM),
System (RM), Waste (RM)
Example of Material Flow Cost Matrix
Mass Costs (RM)
Kg Material Energy System Waste Total

Management
Total 105 148 638 687 0 1473

Input
Positive 25 40 158 149 347

Product
(Product) 24% 27% 25% 22% 24%
Negative 80 108 480 538 0 1,126

Product
(Waste/
Loss) 76% 73% 75% 78% 0% 76%
Total 105 148 638 687 0 1,473

Output
(Injection Molding Process)

|
Improvement Opportunities
| IMPROVEMENT OPPORTUNITIES
STEP SIX
Loss Analysis At Counter Implementation L
Negative Product by Measure Plan N
Cost Factor C
Conduct loss analysis to identify negative Exam

product cost by breakdown
Types of negative product
At each individual quantity centre

- Some quantity centre with higher
material losses maybe due to upstream
process, supply-chain
Types of losses
i. Theoretical loss: off-cut, solvent
medium etc.
ii. Normal loss: set-up, trial run,
cleaning, sample etc.
iii. Avoidable / Abnormal loss:
defective unit etc.
tre
en
yC
ct
du
tit
ro
an
eP
Qu
v
al
ati
du
g
s
Ne
ivi
se
Ind
os
of
fL
s
pe
so
Ty
pe
Ty
|
50
ion Loss Analysis At Counter Implementation
Negative Product by Measure Plan
Cost Factor
e Example of Loss Analysis - 1
Cost of
Manufacturing Positive
Cost Product
(Material,
Energy System,
Cost of
Waste Disposal)
m Negative
Product
1
Types of Negative
Product
Q3
75% 70%
50% Q2
26%
25% Q1
4% Q4
0%
0%
NG Purging Runner Sample
IMPROVEMENT OPPORTUNITIES
Q4 Q1 2
0% 4% Individual
Quantity Centre
STEP SIX
Q2,
26%
Q3,
70%
|
51
52
Cost Factor
Example of Loss Analysis - 2

Loss Analysis At
3
Negative Product by
No Quantity Waste / Waste / Type of Loss

Centre Loss Loss
Waste
Source
Counter
Volume Cost Theoretical Normal Avoidable

Loss Loss Loss
Measure Plan
Implementation
Con
Imp
re
L
idea
C
N
To
To
ion Loss Analysis At Counter Implementation
Cost Factor
Improvement Opportunities - 1
Conduct brainstorming session to gather

ideas.
To identify waste / loss sources.
To plan improvement activities, assign

responsibility and action time frame.
lity
IMPROVEMENT OPPORTUNITIES
ibi
ns
ss
po
/Lo
es
STEP SIX
ste
t-R
Wa
en
em
ify
nt
ov
Ide
pr
Im
53
Loss Analysis At Counter Implementation
Cost Factor
Improvement Opportunities - 2
Implement first cycle of MFCA

1. Resource Planning
2. Material Flow Planning
3. Data Collection
4. Cost Calculation
5. Material Flow Cost Matrix
6. Improvement Opportunities
Repeat step 2 or 3 to 6 after completing each

planned improvement actions for KAIZEN.
FCA
e of M
ycl
Fir st C
to 6
/3
p2
Ste
Conduct
Loss
Analysis
MFCA Data KAIZEN Plan

Collection Improvement
& Cost Matrix Action
Implement
|
MFCA Improvement Impacts
A) Visualisation of Material Losses Within
Organisation / Supply Chain
B) Improving Coordination and
Communication On Material and
Energy Use Within Organisation
C) Improve Material & Energy Efficiency
D) Reduce Environmental Impact
Coo
ses Com rd
os m
ina unica
L
tion tion Energy Effi al an

ial
Mater
and Mate
tal
on act
men
ri
ci
p
en
Im cy
ir d
Env
MFCA IMPROVEMENT IMPACTS
STEP SEVEN
|
56
(B)
Visualisation of material (A) Material Visualised improvement
losses within organisation Material Flow Cost achievements
Flow Cost Matrix
and supply chain Model Identify new opportunities
(Visualised &
Identity) for improvement
Improve material &

(C)
energy efficiency Material
Reduce environmental (D) Flow Cost Communication of
KAIZEN Matrix material & energy use
impact
(Communication)
Enhance profit

(Case Sample)
Material Material
Loss: Loss:
62% 59%
Weight of material loss in FY2007

OMRON KURAYOSHI decreased
Product: Product: by 11% compared to FY2006

38% 41%
FY2006 FY2007
Purchase Quantity Purchase Quantity
Before Improvement After Improvement
MFCA IMPROVEMENT IMPACTS
57
|
STEP SEVEN
Feedback Form
7 Steps in MFCA Implementation
Please ( ) your answer according to this scale
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ANSWER
No. STATEMENT 1 2 3 4 5
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7. Overall
If you find any criteria that does not meet your

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7 Steps of MCS Implementation

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7 Steps of MCS Implementation

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Overview of Material Flow Cost Accounting

What is Material Flow Cost Accounting (MFCA)?

Material Flow Cost Accounting (MFCA) is one of

Organisations seek management tools to link

MFCA is applicable to any organisations,

and not only in developed countries but in

MFCA Team Planning 3

2 Material Flow Planning

5 Material Flow Cost Matrix

7 MFCA Improvement Impacts

i. Assigning roles & responsibilities. i. F

iv. Decide on improvement based on MFCA iii. P

B) Determination of Necessary Expertise

i. Flow of material & energy use:

ii. Material balance: Engineering,

FCA iii. Product reject: QC expertise.

iv. Waste management and environmental

v. Cost allocation: Accounting expertise.

vi. Kaizen: Related process owners.

C) Establish MFCA Working Committee

i. Led by top management.

ii. Consists of various relevant expertise.

iii. May consists of relevant supplier

MFCA Project Leader

Relevant Expertise KAIZEN Teams

A) Determine The Applicable Product D

High material volume used

High disposal cost

Market tendency product

Product High Disposal

Determine The Applicable Product

Supply chain at the discretion of the

B) Determine The Time Period C) C

Full operation period or production lot

C) Create The Material Flow Model - 1

Output waste / loss:

Create The Material Flow Model - 2 C

Documents to consider as reference

Environmental monitoring &

Create The Material Flow Model - 3

Create The Material Flow Model - 4 C

Record each process with a marker pen

Record each input material with a

Record each output, waste or losses

Paste on paper according to process

Input Input Input

Output, Output, Output,

Create The Material Flow Model - 5

e Perform on-site verification to ensure all

Initial Identification of Input,

Discussion and Verification

A) Establish Quantity Centre

A) Establish Quantity Centre Exa

Transfer the material flow model

Each process will be the quantity

Purpose of quantity centre is to

Any significant imbalance found,

Example of Material Balance Sheet - 1

B) Decide Physical Units To Be Used Exa

To facilitate in measuring quantities of

> Measurement units used should be

> Comparative conversion factors

Physical unit is selected based on type

> e.g. mass, length, number of pieces,