Pertemuan 6-7

Akuntansi Keberlanjutan

Material Flow Cost Accounting

(MFCA)
 Tujuan
1. Memahami konsep dan penerapan MFCA
2. Mampu menjelaskan konsep MFCA dan latar
belakangnya
3. Memahami berbagai studi kasus MFCA
 Why MFCA is implemented?
 Simply works …....
 As cost-reduction tool (= higher profit): At least more than a total of
USD 700,000 cost reduction achieved through MFCA
 As higher material management tool
 As higher energy management tool
 As enhancing corporate value brand
 Also .......
 Material cost is more or less same anywhere in the world while other
costs (e.g., labor cost) varies significantly from place to place
 Concept of MFCA
MFCA potentially enables you to gain bigger apple with thinner skin

What are you producing?

Apple? orApple skin?
MFCA lets us consider “producing” both.
What are you producing?
Concept of MFCA

Apple? Or Apple Skin?

MFCA lets us consider “producing” both.
MFCA potential y enables you to gain bigger apple
with thinner skin.
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What is MFCA? – Triple
What is MFCA?impacts
–Triple impacts
For your organization For Others (environment)

Improvement of
material
efficiency

What you can

potentially achieve For your organization
through MFCA
Improvement
For Others
of energy Reduction of
(environment) efficiency cost
CO 2

For your organization

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What is MFCA? What is MFCA?
Material Flow Cost Accounting

Material Flow Cost Accounting 

Material
Product

Material 
Product
loss
Material 
loss

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Role of MFCA Role of MFCA

ISO 
14051
MFCA

Economic 
Environment
al aspects
and quality 
aspects

MFCA fulfills gaps between economic/quality aspects and

environmental aspects.
 MFCA and environmental performance
MFCA and environmental performances
High
Reduce

Focus of MFCA Reuse Process efficiency

&
Environmental
Recycle performance

Thermal recycle/waste management

MFCA and productivity management
 International trend of MFCA

 MFCA became international standard in September 2011 (ISO 14051).

Increased employment of the approach is expected.
 MFCA now became global standard. Now, everyone can implement
anywhere.
 Further dissemination of MFCA is expected.
 Many industries (e.g., Malaysia, Vietnam, Thailand) start to apply MFCA
and gain significant environmental and cost reduction.
 Structure of ISO 14051
Items Contents
Title Environmental management — Material flow cost accounting —
General framework
Content 1. Scope
2. Terms and definitions
3. Objectives and principles of MFCA
4. Fundamental elements of MFCA
5. Implementation steps of MFCA
Annex A Difference between MFCA and conventional cost
accounting
Annex B Cost calculation and allocation in MFCA
Annex C Case example of MFCA
 Scope
• ISO 14051 provides:
– general framework

• ISO 14051 (MFCA) can be:

– widely applied regardless of their products, size, etc.

– extended to supply chain

• ISO 14051 is:

– not intended for the purpose of third party certification
 Terms and definitions
Term Definition
Terms quoted from From IFAC document: Environmental
other management accounting
standard/source From ISO 14040: 2006:process, product, and waste

Terms defined in Cost accounting, cost allocation, energy cost,

ISO 14051 energy loss, environmental management
accounting, input, inventory, material, material
balance, material distribution percentage, material
cost, material flow, material flow cost accounting,
material loss, output, quantity centre, system cost,
waste management cost
 Objective and Principle of MFCA
Objective of MFCA is:
to motivate and support organizations’ efforts
to enhance both environmental and financial performance through
improved material and energy use practices
Financial
Objective of MFCA is accomplished by: performance

• increasing the transparency; Environmental

performance
• supporting organizational decisions in realms; and
• improving coordination and communication on material and energy
use practices.
 ISO 14051

Principles of MFCA

Principles of MFCA

Ensure
accuracy,
Understand
Link physical completeness Estimate and
material flow
and monetary and assign costs to
and energy
data comparability material loss
use
of physical
data

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 Fundamental
elements of MFCA

Material
Quantity Material Cost
flow
centre balance calculation
model

Set measurement point Check balance Calculate cost Set up a model

betw een that links
Products and loss multiple quantity
(material loss) centres

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 Fundamental Elements of MFCA
Material balance
Input Output
Material A Product (70 kg)
(40kg) Material A (30kg)
Material B (20kg)
Material B
Material C (10kg)
(25 kg)
Material D (7kg)
Material E (3kg)
Material C Operation
(20kg)
Material loss(30 kg)
Material D Material A (10kg)
(10kg) Material B ( 5kg)
Material C (10kg)
Material E Material D (3kg)
(5kg) Material E (2kg)

Material Flow
Material balance
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Implementing steps of MFCA in
manufacturing industry
How to Implement in Organization
HOW to Implement in Organization

Firsty, it should be “aggresive support from the

 Firstly, it should be “aggressive support from the Top
Top Management “ then follow by “bottom up
Management” then follow by “bottom up approach on
site”approach on site”
Bottom Up Top Down

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How to Implement in Organization
1. To share this knowledge with company’s key persons/Top
Management.
2. To continually convince Top Management to implement
this MFCA concept.
3. To form a cross-functional team which has an aggressive
and visionary leader.
4. To do a pilot run with minimum resources to prove initial
benefit.
5. To name this project & have project kick of meeting and
have banner in plant. VISIBLE
6. To share knowledge & educate this MFCA with the team
members.
 Implementation steps of MFCA-1
P LA N A C T
5 .2 M a n a g e m e n t in v o lv e m e n t
5 .1 1 I d e n tif ic a tio n a n d a s s e s s m e n t
o f im p r o v e m e n t o p p o r tu n itie s
5 . 3 D e t e r m in a tio n o f n e c e s s a r y e x p e r t is e

5 .4 S p e c if ic a t io n o f a b o u n d a r y

5 .5 E s ta b lis h m e n t o f q u a n t it y c e n t r e s

D O C H E C K
5 .6 Id e n tific a t io n o f in p u ts a n d 5 . 1 0 C o m m u n ic a t io n o f
o u tp u ts fo r e a c h q u a n tit y c e n t r e M F C A r e s u lts

5 . 7 Q u a n t ific a t io n o f t h e m a t e r ia l f lo w s in 5 .9 M F C A d a ta s u m m a ry a n d
p h y s ic a l u n its in te r p r e ta tio n

5 . 8 Q u a n t ific a t io n o f t h e m a t e r ia l f lo w s in
m o n e ta r y u n its

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Implementation steps of MFCA-2

 Management involvement includes

 Leading the implementation
 Assigning roles and responsibilities (e.g., set up of an MFCA
task force);
 Providing resources;
 Monitoring progress;
 Reviewing the results; and
 Deciding on improvement measures based on MFCA results.
Implementation steps of MFCA-3

 Determination of necessary expertise:

 Operational expertise;
 Engineering and/or technical expertise;
 Quality control expertise;
 Environmental expertise; and
 Accounting expertise on cost accounting data and
practices.
 Implementation steps of MFCA-4
Implementation steps of MFCA-4

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 Implementation steps of MFCA-5
Implementation steps of MFCA-5
Specification of a boundary

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 Implementation steps
Implementation steps of MFCA-6 of MFCA-6
Establishment of quantity centres

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 mplementation
Implementation steps steps of MFCA-7
of MFCA-7
entification of inputs and outputs for each quantity
centre
Identification inputs and outputs for each quantity center

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Implementation steps of MFCA-8

 Quantification of the material flows in

physical units
 Quantification
of the material flows in
monetary units
 Interpretation
of MFCA results and
consideration/implementation of
improvement measures
View of Production Processes in MFCA

Quantity Center
(A Production Process )
In pu t Ma t er ia ls P r odu ct s
Production Process of
　 　 Product and Material loss (Ou t pu t a s Good pr odu ct s)

Mass Balance
& Product Costing
Ma t er ia l Loss
( Ou t pu t a s Wa st es )　　　　　　　　　　　　
 Approach of MFCA
Case Study : Approach of MFCA
Electricity

Input Output Product

Material
Factory (70 ton)
(100 ton)
Printed material

Output

Material loss
Wastewater 30 ton

Waste Carbon emissions Emissions to air

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 Solving Analysis
Conventional management Point of MFCA evaluation
Processing cost:
$350,000 Electricity

Input Output Input Output

Product: 70 ton
Material Material cost: $650,000
Material Product 70 ton
(100 ton) QC-1 Factory
QC-2 QC-3 Processing cost: Factory
QC-2
$ 350.000 100 ton
$650,000 --------------------------------
Total $ 1,000,000

Equivalent cost
evaluation
Material loss 30 ton
Material loss: 30 ton

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 Cost calculation based on MFCA-1

Energy cost: $50,000 System cost

Electricity: 10 kW $250,000

Input Output
Product: 70 ton
Material Material cost: $520,000
(100 ton) QC-1 Factory
QC-2 QC-3 System cost: $ 175.000
Energy cost: $ 35,000
$650,000 --------------------------------
Total $ 730,000

Material loss: 30 ton

Material cost : $130,000
System cost: $75,000
Energy cost： $15,000
Waste management cost：$50,000
------------------------------------------
Total $270,000
 Cost calculation based on MFCA-2

Energy cost: $50,000 System cost

Electricity: 10 kW $250,000

Input Output
Product: 70 ton
Material Material cost: $520,000
(100 ton) QC-1 Factory
QC-2 QC-3 System cost: $ 175.000
Energy cost: $ 35,000
$650,000 --------------------------------
Total $ 730,000

Key for improvement

Material loss: 30 ton
Material cost : $130,000
System cost: $75,000
Wastewater Energy cost： $15,000 Emissions to air
Waste management cost：$50,000
------------------------------------------
Total $270,000

Waste Carbon emissions

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Soal MFCA:
Dibawah ini adalah Cost Calculatian based on MFCA dari sebuah UMKM pembuatan jamur kriuk, pada gambar dibawah
sudah dijelaska berapa biaya yang harus dikeluarkan dalam 1 periode produksi dengan tambahan biaya untk waste
management sebesar Rp. 500,000,- per bulan.
Tugas kalian adalah menjawab berapa biaya-biaya yang dihasilkan setelah UMKM menerapkan MFCA dalam membuat
laporan produksinya?
Energy cost System Cost
Rp. 5.000.000 Rp. 1.500.000

Material e.Product : ?
(20kg) f. Material cost: ?
Qc 1
Factory Qc 2
g.Energy cost : ?
Rp. 20.000.000
h. System cost: ?

Material Lost: 5KG

a. Material cost: ?
b. Energy cost : ?
c. System cost: ?
d. Waste Management: ?
Material Loss Analysis

 Theoretical Loss

 Normal Loss

 Abnormal Loss
 Significance of MFCA

Physical approach

Flow
Verification/ Flow Analysis Improvement
visualization

Monetary approach

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Benefit of MFCA

1. Cost reduction

2. Higher quality management

3. Higher social reputation as ”green” company

 - Impact of MFCA-
lens-manufacturing process

Before After
Conventional lens material Near-shaping lens material

80% reduction of
shaved portion

Shaved portion Shaved portion

Source: Japanese Ministry of Economy, Trade and Industry (METI) (2011)

Mat erial Flow Cost Account ing: MFCA Case Examples 2011, METI

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 - Impact of MFCA-
Molding process
From MFCA findings, following improvements activities had been implemented
to the processes.

(a) To re-schedule the production plan to minimize the change-over of

product models and at the meantime, to revise the work instruction
for purging process.

(b) To reduce the delivery lead time by localizing the mold spared part
ordering and tooling repairing to local supplier in order to reduce the
down time of the production.

( c) To introduce an additional process of magnet strength checking to the

process for earlier detection of any quality problem.
 - Impact of MFCA-
printing process
• Reduction of sheet losses (test printing etc.: register and color
adjustments) through countermeasures implemented over a 5
year period from FY 2003:

Source: Japanese Ministry of Economy, Trade and Industry (METI) (2011)

Material Flow Cost Accounting: MFCA Case Examples 2011, METI

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 Conclusion
1. MFCA significantly contributes to company’s sustainability
performance.

2. MFCA became international standard (ISO 14051) and is being widely

employed in many countries.

3. A number of case examples prove that MFCA is very effective, new

Kaizen method for company and supply chain.
 Reference
• ISO 14051 (2011) Environmental M anagement — M aterial Flow Cost A ccounting —
General Framework. International Organization for Standardization.

• METI (2011a) Guidance for Supply Chain Inter-Company Partnership to Improve

Resource Conservation (Ver.3), Recycling Promotion Division, Ministry of
Economy, Trade and Industry, Japan (in Japanese).

• METI (2011b) Case Studies in the Supply Chain Resource Conservation Partnership
Program, Recycling Promotion Division, Ministry of Economy, Trade and
Industry, Japan (in Japanese).

• Kokubu, K, and Kitada H (2011) “Introducing MFCA into the Supply Chain: A
New Possibility,” A Paper presented at The 10th Northeast Asia Management
and economics Joint Conference, Chungnam National University, November
2011.

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Review:
Identifikasi proses produksi sebuah produk: analisis
setiap proses agar efisien dan minimalkan buangan