Material Cost Reduction Implementation


Material Flow Cost Accounting (MFCA) 

The Material Flow Cost Accounting (MFCA) solution is a green productivity tool that helps organizations to reduce both their environmental impact and costs while enhancing productivity. Through MFCA, organizations can systematically identify waste volume and cost information for each step of the selected process. Information visualized in both volume and monetarily will serve as motivation and awareness for cost reduction initiatives. MFCA has been successfully implemented in more than 300 companies in Japan, demonstrating improvement in both financial as well as environmental performance. A recent pilot project in Malaysia with five model companies concluded MFCA is a relatively simple but practical cost reduction tool. MFCA was published as international standard ISO 14051:2011.

MFCA can be used for:

  • Quantifying the flow of materials in production lines in both physical and monetary units. (ISO 14051)
  • Reducing both environmental impact and cost. (MFCA Case book, METI Japan)
  • Processing cost analysis and cost reduction. (Alex Yap, Centrex)


From the practitioner’s point of view, MFCA is defined as a green productivity tool that systematically identifies and visualizes the cost and loss throughout the processes.


MFCA Objective

The objective of MFCA is to support initiatives to reduce production costs and enhance environmental performance by:

  • Improving coordination and communication on material and energy use within an organization.
  • Supporting organizational decisions in areas such as production planning, QC, etc.
  • Increasing transparency of material flow, energy use, and environmental aspects and related costs.


Centrex MFCA Consultancy Project

Centrex Consultancy is the leading MFCA promoter in Malaysia and has extensive experience in MFCA implementation. Centrex customizes its MFCA Consultancy Project to meet the individual customer’s needs including identifying waste in processes, production cost analysis, social responsibilities, and more efficient use of resources such as material, labour, and energy. Centrex not only provides expert MFCA consulting but also offers support in Kaizen, management system integration of ISO 14051, and MFCA into ISO 9001 or ISO 14001.

Centrex’s method simplifies MFCA using a minimum of resources such as a Microsoft Excel template and support staff that collects information history of electricity bills, labour charges, raw materials usage, and products produced in order to construct the MFCA model to identify areas for improvement. The next step your Centrex consultant will initiate Kaizen improvement coaching, which helps the organization to reduce waste and improve use of resources. The actual cost reduction of material use will be verified through the MFCA’s PDCA (Plan. Do. Check. Action.) cycle. The Centrex approach will always lead to sustainability of improvement, by integrating the MFCA activities into the client’s existing management system such as ISO 9001, ISO/TS 16949, ISO 22000, or ISO 14001.