Material Flow Cost Accounting Implementation Research Articles

Career or environmental crusade? – Irfan’s dilemma

Subject area Integrated Case Study, Advanced Management Accounting, Environmental Management Accounting (EMA), Human Resource Management. Study level/applicability This case is designed for undergraduate students in accounting, business or human resource management programmes. Case overview The case is about Irfan, a former Production Manager in Omicron, a small and medium-sized enterprise in Selangor, Malaysia, manufacturing automotive metal parts. Irfan is truly enthusiastic for environmental and cost-reduction tools and wishes to pursue it further to his best possible. The case presents Irfan facing the dilemma of how to align his passion for these tools to his future career choice. He is faced with three options – to remain in Omicron, to accept a job offer in another company or to establish his own consultancy firm. The case highlights the heavy involvement of Irfan in the implementation of a new environmental tool, Material Flow Cost Accounting (MFCA) in Omicron, and all the tasks, activities, benefits and challenges encountered. Being at the ground with the implementation and outputs achieved, Irfan is excited about MFCA and wants to continue with it, due to the rich and valuable experience gained from its implementation and its potential for future savings. However, he does not seem to observe a similar excitement among the higher management. The case details an example of the implementation of MFCA for one of Omicron’s products and other relevant information that could serve as a guidance to any future implementation either in Omicron, the new company or even his own company. The case also provides details about Omicron and how Irfan regard Omicron as his second family to hint a strong pulling factor for Irfan to remain in Omicron, hence providing the extra weight on the dilemma he faces. Expected learning outcomes In the process of assessing a career choice dilemma for a middle-level manager, students are expected to analyse the three career options available to this middle manager, whose dilemma also relates to his passion of pursuing environment-related and cost-reduction tools. Where the environment is concerned, some parties need extra persuasion to pursue it and this also triggers the middle-manager’s dilemma. This case is intended to provide a tool to enable students to review and discuss matters, such as overcoming obstacles of pursuing environmental-related initiatives and progressing a mid-life career that provides self-fulfilment financially, emotionally and mentally. Among the theories and concepts referred include diffusion of innovations theory, EMA concepts and Hofstede’s cultural dimensions. Supplementary materials Teaching Notes are available for educators only. Subject code CSS 1: Accounting and Finance.

Improving financial and environmental performance through MFCA: A SME case study

SMEs around the globe are often challenged by the issues related to productivity enhancement, material usage, waste management and sustainability. Material flow cost accounting (MFCA) is considered as a green productivity tool that can be utilised by SMEs to overcome these challenges. Despite the benefits, its adoption among SMEs, especially in developing countries, remains low. The purpose of this research is to examine how MFCA can be suitably implemented in an SME set-up to improve the financial and environmental performance of the enterprise. This study utilises case based research methodology to exemplify the application of MFCA tool in an Indian steel pipes and tubes manufacturing SME. As a part of MFCA analysis, material cost, system cost and energy cost at each quantity center was calculated to identify inefficiencies in the production process of the SME. Thereafter, several solutions were implemented to address these inefficiencies. The result of the MFCA implementation showed an overall annual savings of 21,028,452 INR (USD 302,350) through an investment of 495,400 INR (USD 7123). The present study reveals that the application of MFCA tool leads to higher productivity, better energy efficiency and improved environmental performance. The SME’s performance was also monitored for five years to study the long-term benefits of MFCA implementation. The findings suggest that, post MFCA implementation, the return on invested capital of the SME increased by 29.37% and the material usage cost reduced by 26.58%. This research would be beneficial to managers, practitioners, and policymakers for effectively implementing MFCA in SMEs.

Supply chain MFCA implementation: emphasizing evidence on coordination

Purpose This study aims to clarify systematically the contribution of material flow cost accounting (MFCA) to green supply chain management (GSCM) by examining the coordination mechanisms. Design/methodology/approach Two qualitative case studies are conducted in a major Japanese manufacturing company, which introduced MFCA in two different supply chains. The concept of coordination mechanisms in supply chain management is used to consolidate the understanding on the usefulness of MFCA in GSCM. Findings The study’s findings reveal the significant role played by MFCA in coordinating material flows and eliminating sub-optimization in the supply chain from both economic and environmental perspectives. Furthermore, the focal company in the chain has an important role as the MFCA leader in implementing MFCA in the chain. In particular, the environmental department can eliminate suppliers’ concerns regarding opportunistic buyer behaviors and focus on material flows across the supply chain. Research limitations/implications The study highlights the possibility of reviewing existing transactions by coordinating material flows. This is a new direction for the adoption of MFCA in GSCM. In addition, although the study highlights the importance of the environmental department as an MFCA leader, future research is necessary to establish this aspect with greater precision. Practical implications The two case studies discussed in this paper demonstrate the usefulness of MFCA expansion into the supply chain, as well as information sharing and progression, in the development of GSCM. Social implications This study will contribute to enhance the green supply chain by implementing MFCA. Originality/value This study indicates that MFCA can potentially reveal the material losses caused by sub-optimization and provide information to avoid sub-optimization in decision-making. Moreover, it highlights the importance of the environmental department as an MFCA leader.

PERSEPSI DOSEN AKUNTANSI PERGURUAN TINGGI DI JAKARTA ATAS IMPLEMENTASI MATERIAL FLOW COST ACCOUNTING (MFCA)

The purpose of this study is to determine the perception of accounting lecturers in Universities across Jakarta on the implementation of material flow cost accounting (MFCA). The variables in this study are the perception of accounting lecturers in Jakarta and MFCA implementation. The data was obtained using purposive sampling method and a survey questionnaire answered by accounting lecturers of various Universities in Jakarta. The samples used were 180 questionnaires. The analysis technique used is Mann-Whitney. The results indicates a positive response from accounting lecturers in Jakarta, that this is the time for Universities with accounting program to hold an environment accounting class and companies to implement MFCA. The results of subsequent studies indicate that there are differences in the perception of accounting lecturer between the big and the small Universities in Jakarta on the implementation of MFCA.

Preliminary Design of Industrial Symbiosis of Smes Using Material Flow Cost Accounting (MFCA) Method

Industrial symbiosis is a collaboration of several industries to share their necessities such material, energy, technology as well as waste management. As a part of industrial ecology, in principle, this system attempts to emulate ecosystem where waste of an organism is being used by another organism, therefore there is no waste in the nature. This system becomes an effort to optimize resources (material and energy) as well as minimize waste. Considerable, in a symbiosis incure material and energy flows among industries. Material and energy in an industry are known as cost carriers, thus flow analysis in this system can be conducted in perspective of material, energy and cost, or called as material flow cost accounting (MFCA) that is an economic and ecological appraisal approach. Previous researches shown that MFCA implementation could be used to evaluate an industry’s environmental-related efficiency as well as in planning, business control and decision making. Moreover, the MFCA has been extended to assess environmental performance of SMEs Cluster or industrial symbiosis in SMEs Cluster, even to make preliminary design of an industrial symbiosis base on a major industry. This paper describes the use of MFCA to asses performance of SMEs industrial symbiosis and to improve the performance.

Material Flow Cost Accounting, Perceived Ecological Environmental Uncertainty, Supplier Integration and Business Performance: A Study of Manufacturing Sector in Malaysia

This article seeks to explore the implementation of Material Flow Cost Accounting (MFCA) across the manufacturing sector. The paper aims to understand the role of perceived ecological environmental uncertainty (PEEU) and supplier integration (SI) on MFCA implementation, and thus subsequently examines the effect of MFCA implementation on firms’ environmental and economic performance. The research model was empirically tested based on online-survey. The questionnaires were emailed to 1200 randomly selected industrial firms. The usable responses was 123 firms. The data was analysed using a structural equation modelling (SEM) approach through partial least square (PLS) software. The main results from survey of 123 companies showed low level of MFCA implementation. Further, the analysis of PLS indicated that companies which recognise bigger ecological environmental uncertainty are less motivated to implement MFCA.Tthe study also found that SI has a direct positive impact on MFCA implementation since companies which decided to implement MFCA were more likely able to achieve better environmental and economic performance. Thus, companies perceive the importance of being ecologically responsible and that such practice will increase companys’ prosperity in many ways, ecologically and economically.

Material flow cost accounting as a tool for improved resource efficiency in the hotel sector: A case of emerging market

Material Flow Cost Accounting (MFCA) is one of the Environmental Management Accounting (EMA) tools that has been developed to enable environmentally and economically efficient material usage and thus improve resource efficiency. However, the use of this tool to improve resource efficiency in the South African hotel sector remains unknown. An exploratory study, qualitative in nature, was conducted using a single case study with embedded units approach. A Hotel Management Group that met the selection criteria formed part of this study. In-depth interviews were conducted with 10 participants and additional documents were analysed. The investigated hotels have developed technologies that provide an environmental account in both physical and monetary units which constitute the use of MFCA to improve resource efficiencies. However, the study established a number of factors that affect the implementation of MFCA by the hotel sector in a South African context.

ISO 14051: A new era for MFCA implementation and research

Material flow cost accounting (MFCA) is a tool designed to encourage eco-efficiency in organizations by focusing on a reduction in use of materials and related improvements in economic performance of corporations. It provides a way to identify win–win situations where monetary and environmental performance can both be improved. But take-up by business is slow, which seems to go against the notion of strong competition driving economic performance. A recent standard, ISO 14051, has been produced by the International Organization for Standardization, and could bring substantial change to MFCA implementation and research. Drawing on Rogers (2003) theory of diffusion of innovation, and with a focus on the first two stages of the innovation-decision process, knowledge and persuasion, this study sought to analyze MFCA and predict how the 2011 release of ISO 14051 might be expected to influence take-up of MFCA by business, and what this might mean for future research. The analysis revealed that, when combined with ISO involvement, MFCA is well placed in terms of Rogers’ theory, with the future likely to see increased diffusion of MFCA and, as adoption rates increase, more opportunities for research in this area. Specific areas identified as a result of the analysis include: the introduction of new research methods, the need for theoretically informed research, and the potential to address new research questions previously considered impractical.

Material Flow Cost Accounting (MFCA) enablers and barriers: the case of a Malaysian small and medium-sized enterprise (SME)

The introduction of Material Flow Cost Accounting (MFCA) to five companies under the Malaysia Productivity Corporation (MPC) project has shown that these companies have indeed achieved simultaneous benefits of economic gains and environmental sustainability. This paper highlights the experience of one of the companies, emphasising how one can leverage enablers and also overcome barriers to implementing MFCA in a small and medium-sized enterprise (SME) in Malaysia. Driven by the diffusion of innovation (DOI) theory, the case company found most of its enablers within MFCA's own attributes. Additionally other factors such as the team composition, interpersonal communication, and efforts of the change agents were instrumental in the success of the MFCA implementation. However, the company was also constrained by its suppliers. More importantly, it is envisaged that a potential hurdle for MFCA advancement is when performance management issues are not addressed by higher management. Drawing upon the company's experience and the theoretical literature, other barriers that may also be encountered by SMEs in Malaysia are also discussed. These include for example, overcoming the traditionalist view held by most SMEs, persevering the implementation processes on their own without the direct assistance from MPC and several others.