Materials costs generally form a substantial part of industrial enterprises costing and thus, it becomes extremely important for companies to focus on material efficiency. This is accomplished through reducing necessary raw material and/or waste, optimized production techniques and organizational measures, recycling, innovative product and packaging designs. Moreover, to enhance material efficiency, it is imperative to have high transparency of material flows within and across companies. To attain this objective, Material Flow Cost Accounting (MFCA) has been developed. It is a management tool that helps organizations to better understand potential environmental and financial consequences of their material and energy operations. It can help calculate cost data for the material flows during each step of the process, including material, energy, labour and waste management costs.
The goal of MFCA is to enhance environmental and economic performance through refined material and energy use. It aims to support organizational decisions in areas such as process engineering, production planning, quality control, product design and supply chain management. It also strives to improve coordination and communication on material and energy use within different organizations. Thus, MFCA is instrumental in an integrated analysis of material and energy flows.
The international standardization of the MFCA method was carried out by the working group of the International Standardization Organization’s Technical Committee (ISO WG 207/ WG8) and the standard (ISO 14051:2011) was published in September 2011. The general procedure of MFCA consists of three steps: flow structure modelling, quantification of flows and evaluation (cost appraisals of the quantified flows). In the first step, material and energy flows system boundaries are specified. The boundaries can span a single or several processes, the whole organization or even entire supply chains. Furthermore, the specification of a time period is important. In the second step, based on the flow structure, material flows have to be quantified in physical units such as mass, length, volume or number of pieces. By using a single standardized unit for every quantity center, a material balance can be created. Within the last step, material flows are quantified in terms of monetary units in order to evaluate them while clearly differentiating between material, energy and waste management costs.