0. Material Flow Cost Accounting
（ＭＦＣＡ）
March, 2013
Yoshikuni　Furukawa
Secretary of ISO/TC207 WG8
NITTO DENKO CORPORATION

1. Contents: 1. Introduction 2. Significance and Characteristics of
Material Flow Cost Accounting (MFCA)
3. MFCA vs. Conventional Cost Accounting
4. Implementation & Case Example of Nitto Denko
5. Implementation & Key Factor for Success

2. Introduction

3. Significance of Material Flow Cost Accounting
MFCA focuses on emission (waste)
Profit is hidden in emission (waste)
MFCA finds out the hidden profit
INR
MFCA
Significance of Material Flow Cost Accounting
Japanese “Mottainai” Concept,
“What a shame to be wasteful” in ISO

4. Contributing to sustainable development
Benefits of MFCA
Increasing profit
Improving productivity
Internal benefits
External benefits
Reducing environmental impacts
Contributing to sustainable development

5. Conventional Cost Accounting

6. Characteristics of MFCA

7. MFCA vs. Conventional Cost Accounting

8. Implementation of MFCA
Cost Elements
1. Material: Input　Value　of　Material　
　 2. Energy: Input　Value　of　Energy
3. System: Labor, Depreciation　and　etc.,
　 4. Disposal (Waste Management Cost)：

9. Material Flow Cost Accounting (Flow Model)

10. “Material” Flow Chart with Data
Top: Adhesive(Red)
Middle: Backing　Film(Blue)
Bottom: Separator(Green)
Product: Adhesive Tapes for Electronics Application
Quantity: 912pcs.
Period: one month (Nov , 2000), (JPY1.80/INR )
Flow　to　Product
Flow　to　Waste
29%
68%
　3%
　 Waste:　　　103.14㎏
　　　　　　 7，299.10㎡
　　　　　　　10，785.50㎡
Waste: 　￥21，852.79
　 ￥384，163.18
￥497，792.32
<Total　Waste>
　　　Waste:　　　　　86.27㎏
　　　　　　　　430.35㎡
　　　　　　　　2,642.25㎡
　　　Waste:　　 ￥13,357.00
￥22,,650.00
　￥121,950.00
Solvent　Gases　1,981.29㎏
Solvent　Gases ￥99，064.50
　Waste:　　　　289.41㎏
　 7，729.45㎡
13，427.75㎡
Waste:　￥35，209.79
　￥406，813.18
￥619，742.32
（￥1，061，765.29）
　　　　　351.01㎏
　　24，840.60㎡
28，327.00㎡
　 　￥74，370.26
￥1，307，400.00
　Slitting　etc.,
　　　　　　　　　　　　　　￥65，009.62
　　　　￥1，142，850.00
　　　　　　￥1，142，850.00
　　306.83㎏
　21，714.15㎡
　24，761.75㎡
　Coating & Drying
SI:　　　　　　　127.58㎏
9，028.80㎡
10，296.00㎡
EI:　　　　　　　　83.40㎏
5，902.35㎡
6，730.75㎡
　　　SI:　　　　￥27，031.58
￥475，200.00
　　　　　　EI:　　　　￥17，670.94
￥310，650.00
　Store
　　　　　247.87㎏
　　17，541.50㎡
17，541.50㎡
￥52，517.47
￥923，236.82
￥809，607.68
Core　etc￥714，582.22
　（￥2，499，944.19）
Product
2，474.39㎏
　　　　　　　22，144.50㎡
　　　　　　　27，404.00㎡
　　￥177，431.12
　　￥1，165，500.00
￥1，264，800.00
Dissolution　etc.,　
Solvent　Gases　1，981.29㎏
Solvent Gases ￥99,064.50

11. Allocation Method of “Energy and System Cost”
Cost Elements
Allocation Base
Allocation Type
Energy （electricity）
Consumption B
Energy （fuel）
Consumption B
Labor (legular employee）
Man-hour A
Labor (part-timer)
Man-hour A
Depreciation
(straight-line method)
Operating time B
Maintenances
Expenditure C
Tools and Implements
Expenditure C
A　：　Allocation on base of real data
B　：　Allocation on base of monthly data (correctly as possible)
C　：　Apportionment on base of monthly data

12. Result of Material Flow Cost Accounting
Period: from November 01 to 30, (Unit: JPY ), (JPY1.80/INR )
Cost
Material
Energy
System
Disposal
Total
Product
2,499,944
(68.29%)
57,354
480,200
N/A
3,037,498
(67.17%)
Material loss
1,160,830
(31.71%)
26,632
222,978
74,030
(100%)
1,484,470
(32.83%)
3,660,774
83,986
703,178
4,521,968
912pcs (100%)

13. Material Flow P/L (Unit: Yen) Conventional P/L (Unit: Yen)
Comparison of P/L
Period: from November 01 to 30, 2000 (Unit: JPY) , (JPY1.80/INR)
Material Flow P/L (Unit: Yen)
Conventional P/L (Unit: Yen)
Sales*
15,000,000
Cost of
Product
3,037,498
Cost of Sales
4,521,968
Material loss
1,484,470
N/A
Gross Profit
10,478,032
Selling, General and Administrative Expenses*
8,000,000
Operating Profit
2,478,032
*Provisional Figure

14. Decision Making Flow (1)
Input value of Material Loss and input value of Product
are clarified in each Quantity Center.
The Material Loss Analysis in each Production Process
Implemented Countermeasure to reduce Material loss
Increase of profit and reduction of environmental impact

15. Decision Making Flow (2)
Material Loss Analysis　
1. Theoretical/ Design Loss:
Machine Design, Solvent Medium, Edge of Jumbo Roll, etc
2. Normal Loss:
Set-up, Trial Running, Cleaning, Sample, etc
3.Avoidable/Abnormal Loss:
Poor Workmanship, Spoilage, Defective Unit, etc

17. Recovery, Refinement, Deodorizing Furnace
The cause of losses need to be examined from a perspective of supply chain.
It is important to trace upstream the cause of losses (e.g. Upper processes, Materials, suppliers)
Recovery, Refinement, Deodorizing Furnace
Suppliers ③
Solvent Gases
(100%)
Two of materials
(Unit: Width x Length)
Backing Films:
　　　570mm width
(2) Separator:
　　　650mm width
Four of materials
(Unit: Kg)
-Solvent
-Monomer
-Crosslinker A
-Crosslinker B
Gas emissions
Auxiliary materials
Packaging materials
Energy
Steam, Thermal
(2) Electric power
Two of
materials (Unit: Kg)
Solvent, Polymer
One of material:
Plastic core (Unit: Piece)
Energy: Electric power
￥172,900.70
￥541,681.52
Materials
Manufacturing
Division ② ①
￥1,307,400.00
　　￥74,370.26
￥923,236.82
￥809,607.68
　￥52,517.47
￥104,494.22
￥72,936.90
Dissolution
Batch Blend
Coating & Drying
Store
Slitting
Inspection &
Packing
Warehouse
Upper quantity center
Finished Products（912 rolls)
Backing film: ￥923,236.82
Separator: ￥809,607.68
Adhesive: ￥52,517.47
Plastic core:　 　￥541,681.52
Packaging materials:￥172,900.70
　　 Total　　 　￥2,499,944.19
Two of materials (Unit: Kg)
Solvent, Polymer
Adhesive Mass (Unit: Kg)
Each size of product
(Width x Length)
Finished Product:
Adhesive tapes for Electronics Application
Quantity: 912 rolls
Waste
Waste
Waste
　￥22,650.00
￥121,950.00
￥384,163.18
￥497,792.32
　￥21,852.79
The cause of losses does not always lie in the quantity center where they occurred
￥13,357.00
Energy cost: \83,986
（Dissolution, Batch blend, Coating & Drying, Slitting & Inspection and Packaging)
Waste：　
Backing film：　　　　￥22,650
Separator：　　　￥121，950
Adhesive：　　　￥13，357
Waste： out of Jumbo Roll
Backing film：　　￥384，163.18
Separator： 　￥497，792.32
Adhesive： 　￥21，852.79

18. Headline of major Japanese Newspaper:
Nitto Denko and MFCA
Invested ”seven hundred
million JPY”, based on MFCA
Reducing Costs
Firstly in Japan
(Note:JPY1.80/INR)

19. What is ignored in Conventional Cost Accounting
Cost of finished product
Cost of waste
Theoretical　
Design loss
Avoidable/
abnormal
loss
Normal
The scope of improvement target in standard costing
The scope of improvement target in MFCA
Ignored
Standard cost (including allowable losses)
Cost of finished product

20. Mass Balance vs. Yield Ratio

21. MFCA and PDCA Cycle Repeat this cycle Determine the applicable product
and boundary
Establish quantity centers
Set up the material flow model
Decide data collection methods
Determine allocation methods of energy and system cost
Collect material flow data
Make the flow cost matrix
Analyze material flow data
(loss analysis and process analysis)
Plan measures to solve problems
Implement measures planned
Cost reduction and lowered
environmental impacts
Repeat
this cycle

22. Improvement 67% 78% 93% 33% 22% 7% Total 100% Cost 2001 2004 2012
(Latest)
Product
67%
78%
93%
Material
Loss
33%
22% 7%
Total
100%

23. Example of Key Factor for Success(1)
Number of the established quantity center
Cost (man-hours)
and
degree of the accuracy of data
High
low
small
large
Cost
Degree of the accuracy of data
Reasonable level

24. Example of Key Factor for Success (2)
　Priority of Countermeasure:
1. Avoidable/Abnormal Loss:
Poor Workmanship, Spoilage, Defective Unit , etc
2. Normal Loss:
Set-up, Trial Running, Cleaning, (Sample), etc
3. Theoretical/ Design Loss: 　

25. Environmental Impacts
External Benefits
Environmental Impacts
1. Reduction of industrial waste
2. Reduction of CO2 emission

26. Improvement
Unit: Ton CO2, one product only
Cost
2001
2004
2011
Product
136.8
Material
Loss
73.2
66.0 (-7.2)
58.8
(-14.4)
Total
210.0
202.8
195.6

27. Conclusion of MFCA 現行の会計システムを変えるものではない 製造工程単位に廃棄物原価（負の製品）を把握
産廃原価はレントゲン、マテリアルフローコスト会計はＣＴスキャン
どの製造工程の改善に人とお金を投入すべきか
優先順位が明確になる
改善効果は「負の製品阻止額（新しい概念）」
現行の会計システムを変えるものではない
Necessary information for implementation is often already in a site
It enables companies to cut costs and reduce environmental impact simultaneously
MFCA grasps the cost of material loss for each production process
MFCA is like a CT scanner that provides clearer picture of manufacturing processes
It helps to determine the priority of process improvement
The improved performance will be made clear as
“savings from curtailing material losses”