The interpretation and extension of Material Flow Cost Accounting (MFCA) in the context of environmental material flow analysis

Abstract

Material Flow Cost Accounting (MFCA) enables companies to identify the added value they lose as a result of material losses. MFCA can also be understood as a special allocation method for distributing the costs in a production system to both the products and the material losses. A mathematical algorithm for this purpose that can be deployed flexibly is presented. It is based on the physical quantity structure of the energy and material flows in a production system. These physical quantities can then be taken to represent monetary values or environmental impacts. From an economic standpoint the outcome is the known MFCA. From the environmental standpoint it is possible to calculate what environmental impacts could be saved by reducing the material losses. The process can also be used to analyze internal recycling flows and their potential for economic and ecological improvement. In particular, the algorithm is suitable for creating software solutions that can perform transparent cost accounting as well as environmental accounting with consideration given to the MFCA approach for all kinds of complex production systems and supply chains. This supplies valuable information that can help companies in deciding what material flow-related measures are suitable for saving costs and reducing environmental impacts.