The ISO 14000 series has proved to be handy for quite a while now. Companies and public institutions have valued the universal guidelines for all sorts of environmental management procedures – energy management, carbon footprinting and life cycle assessment, to name the most important ones. Two years ago, a new seed was planted in the ISO 14000 orchard, bearing the name ISO 14051. This new norm was equipped with the powerful claim of combining the material and energy efficiency improvements already known from the other norms with measures to increase cost efficiency as well. In order to match these expectations, the principle that ISO 14051 relies on is called Material Flow Cost Accounting (MFCA). Despite its apparent “double” usefulness – never has it been more obvious how ecologic and economic benefits go hand in hand – the new norm has not yet caught up with the popularity of its brothers and sisters. In an attempt to help in paving the way to an increased number of 14051 certified companies, those willing to both reduce their financial costs and their environmental burden, let me explain in simple terms how the 14051 procedure works.
Plan-Do-Check-Act
The basic structure underlying the norm is a simple Plan-Do-Check-Act-cycle (PDCA). However, at first sight, the steps involved in each step of this cycle may be irritating. Among the ten steps, there are lots of different involvements, determinations, identifications and quantifications to set up, mixed with interpretations and communications. Thank god I’m not the first to go through this, thank god some practitioners have already shared their experience, and thank god they have related it to a concrete example! There is a work group called eniPROD that dealt with “Energy-related [technological] and economic evaluation”. Its four researchers – Schmidt, Hache, Herold and Götze – (Germany, correct!) work at Chemnitz University of Technology and they published an extensive, 17-page guide to Material Flow Cost Accounting that can be found in the publicly available “Proceedings” of their first two workshops. The complete proceedings are available for download at the Quality Content of Saxony pages; the MFCA-chapter is number 2-05 (PDF). This document explains the calculation of material flow costs with the help of an example. The example consists of a machine’s manufacture, a machine called an extrusion recipient. Each of its three components goes through four production steps before they’re all joined together by shrink fitting. Once manufactured and sold, extrusion recipients are used to make profiles from raw aluminum billets, e.g. in the automobile industry.
1. Plan: Who? What? When?
The most intuitive part of Material Flow Cost Accounting is probably the planning phase. The ISO norm suggests that you start by involving the company’s management and continue by determining whether your staff is suitably qualified and fully accepts being involved. This is most certainly a wise procedure with whatever planning you have going on; our norm calls it determination of necessary expertise. Step 3 in the planning phase sets the pace for all the other steps, since this is the time when you specify a system boundary and a time period. In other words, how detailed should the accounting become? The researchers from Chemnitz elaborate:
Basically, the boundaries can span a single or several process(es), the whole organisation or even entire supply chains.
The last step in the Plan phase consists of defining what are called quantity centers. What’s that? Different interpretations are mentioned, reaching from the vague, “any potentially loss-causing point”, to the precise processes of “receiving, cutting, assembling, heating and packing”. But really, defining quantity centers means getting a good sketch of what’s happening throughout your production.
2. Do: Model Material and Financial Flows
Having the quantity center sketch as a basis, you can easily discover the in- and outputs for each process. This first step in the Do-phase, and the fifth step overall, is called identification of inputs and outputs for each quantity center. Next, these throughputs need to get a physical unit for quantification. This quantification refines inputs and outputs, making it possible to see material flows. Ah, right: because the method we’re dealing with is a cost accounting one, not only do we need a physical unit, but also a financial one. It’s as simple as that: steps six and seven deal with quantification of the material flows in physical and monetary units.
In order to accomplish these steps, you can either hire a busload of mathematically fit day laborers, or apply a neat computer model. The Chemnitz-researchers preferred the latter. Their choice was the material flow management and LCA software Umberto. Before we jump right into praxis, and looking at some screenshots, let me quote one of the authors’ introductory sentences that recapitulates the initial reason for choosing MFCA, or why anyone would want to model their production process using a computer program.
A precondition for enhancing material efficiency is a high transparency of material flows within or even across companies and the corresponding material costs.
Yes, that’s why. Because with this understanding at hand, it is just a question of time before material and energy efficiency increase. Qualified day laborers are a thing of the past anyway… So for the detailed procedure of how to set up this flow cost model in Umberto, see pages 10 and 11 of Schmidt, Hache, Herold and Götze’s PDF. So where are the screenshots? Here:

And here:

3. Check: Interpret + Communicate Results
Phase three has two steps that are a logical consequence of creating the model in the previous phase. In step 8, data summary and interpretation, the necessary conclusions are drawn from the material flow models. In step 9, these results are communicated. On page 12 of their paper, Schmidt et al. explain how comparison of the two flow models, the material one and the monetary one, leads to unexpected discoveries:
The comparison […] shows differences between the relative quantities and costs of product and loss flows. For example, the incoming and the outgoing arrow in T5 have the same width in figure 3, based on the assumption that there are no quantity differences. In figure 5, the outgoing arrow is wider than the incoming arrow because of added system costs. As a second example, it can be seen that cutting waste in P28 is less cost-intensive than cutting waste in P27. The relation of quantities in figure 3 is nearly 4:1 while the relation of costs in figure 5 is approximately 2.5:1. This can be explained by the increasing value of materials within material flows.
Material Flow Cost Accounting is not limited to manufacturing. On its corresponding website, the international standards organization makes this point:
Under MFCA, the flows and stocks of materials within an organization are traced and quantified in physical units (e.g. mass, volume) and the costs associated with those material flows are also evaluated. The resulting information can act as a motivator for organizations and managers to seek opportunities to simultaneously generate financial benefits and reduce adverse environmental impacts. MFCA is applicable to any organization that uses materials and energy, regardless of their products, services, size, structure, location, and existing management and accounting systems.
4. Act: Improve!
The final MFCA step, identification and assessment of improvement opportunities, is up to you. Happy Flowing and fruitful Accounting!
Further Reading
Schmidt, A., Hache, B., Herold, F., Götze, U. (2013): Material Flow Cost Accounting with Umberto®; Proceedings of the 1st and 2nd workshop of the cross-sectional group 1 “Energy-related technologic and economic evaluation” of the Cluster of Excellence eniPROD (231-247), Collaborative Research Centre 692, Chemnitz University of Technology. PDF downloads here.
Article image shot and edited by Moritz Bühner, CC BY 3.0.
- Trends & Technology (104)
- Products & Solutions (101)
- News & Updates (72)
- Challenges (69)
- Sustainability (54)
- life cycle assessment (44)
- Compliance (34)
- Energy efficiency (29)
- carbon footprint (24)
- circular economy (24)
- echa (21)
- LCA (19)
- Resource efficiency (19)
- SCIP (19)
- Umberto (18)
- material efficiency (18)
- Climate Change (16)
- Material flow cost accounting (15)
- material flow analysis (12)
- Renewable energy (11)
- automotive (11)
- Process Optimization (10)
- environmental product declaration (9)
- Ecodesign (8)
- Efficiency (8)
- Lca databases (8)
- Sustainable development (8)
- Transparency (8)
- Trends (8)
- life cycle inventory (8)
- Customer driven-sustainability (7)
- Eco label (7)
- Ecological footprint (7)
- Ipoint suite (7)
- Reach (7)
- Supply chain (7)
- Survey (7)
- blockchain (7)
- Renewable heat (6)
- digital product passport (6)
- research (6)
- China (5)
- Corporate carbon footprint (5)
- Digitalization (5)
- Industrial ecology (5)
- Materialflusskostenrechnung (5)
- carbon footprinting (5)
- carbon neutrality (5)
- waste management (5)
- Big Data (4)
- Climate protection (4)
- Cobalt reporting (4)
- Conflict minerals (4)
- Dematerialization (4)
- EPD (4)
- GHG reduction (4)
- Green construction (4)
- Life cycle management (4)
- OECD (4)
- Okobilanzierung (4)
- Social metabolism (4)
- Sustainable transport (4)
- carbon neutral (4)
- construction industry (4)
- germany (4)
- Brexit (3)
- Chemical industry (3)
- Conflict minerals reporting (3)
- Corporate Social Responsibility (3)
- Database (3)
- Decarbonization (3)
- Due diligence (3)
- E-mobility (3)
- Environmental product declarations (3)
- Eutrophication (3)
- IFEU (3)
- ISO 50001 (3)
- Industrial sector (3)
- Innovation (3)
- Leed (3)
- Medical device (3)
- Photovoltaics (3)
- Ressourceneffizienz (3)
- Social media (3)
- Sustainable business (3)
- building sector (3)
- greenhouse gas inventory (3)
- svhc (3)
- transport sector (3)
- water footprint (3)
- 20-20-20 Objectives (2)
- 3D printing (2)
- BASF (2)
- Christian-Doppler-Laboratory (2)
- Competence center (2)
- Cycling (2)
- E-car (2)
- Electric car (2)
- Emerging economies (2)
- Environmental impact (2)
- Environmental management (2)
- Environmental performance (2)
- Environmental sustainability index (2)
- European commission (2)
- Fish (2)
- Gate to gate (2)
- Global warming (2)
- Governance (2)
- Green business 2 (2)
- Green investment (2)
- Human rights (2)
- ISO-14051 (2)
- Inatba (2)
- Integrated reporting (2)
- Integrative approach (2)
- Knowledge economy (2)
- LCA data from suppliers (2)
- Life cycle thinking (2)
- MFA (2)
- Manufacturing industry (2)
- Okobilanz (2)
- Pcf (2)
- Product management (2)
- Renewable Resources (2)
- Sdgs (2)
- Software (2)
- Steady state economy (2)
- Sustainable lifestyle (2)
- UK REACH (2)
- Umberto for carbon footprint (2)
- Umweltbundesamt (2)
- Wastewater treatment (2)
- Water management (2)
- agriculture (2)
- best practice (2)
- biodiversity (2)
- biomass (2)
- building standards (2)
- carbon emissions (2)
- carbon intensity (2)
- carbon relocation (2)
- collaborative consumption (2)
- consistency (2)
- corporate material flow modeling (2)
- cost savings (2)
- developing world (2)
- eLCAr (2)
- energiewende (2)
- energy (2)
- esankey (2)
- food industry (2)
- green jobs (2)
- holistic approach (2)
- lca-software (2)
- milk (2)
- modern slavery (2)
- okobilanzdaten (2)
- productivity (2)
- resilience (2)
- sankey diagram (2)
- seafood (2)
- transport (2)
- uk-rohs (2)
- 2012 (1)
- 3 scopes (1)
- ACHEMA (1)
- AI (1)
- Abfallwirtschaft (1)
- Ankara (1)
- B2B (1)
- BMBF (1)
- BREEAM (1)
- Bachelor program (1)
- Bauwesen (1)
- Brazil (1)
- CFC (1)
- CO2-Fußabdruck (1)
- Carbon Accounting (1)
- Central america (1)
- Circular Economy Action Plan (1)
- Club of Rome (1)
- Co2 Pricing (1)
- Commercial Sector (1)
- Comparative life cycle assessment (1)
- Compliance agent (1)
- Composite indicator (1)
- Construction (1)
- Consumer goods (1)
- Consumption (1)
- Country Attractiveness (1)
- Creative sustainability (1)
- Critique of the green economy (1)
- Csr report (1)
- Dairy (1)
- Dashboard of sustainability (1)
- Data (1)
- Data collection (1)
- Davos (1)
- Denmark (1)
- Design (1)
- Deutschland (1)
- Developing countries (1)
- Dienstleistungen (1)
- Digital twin (1)
- Distributed manufacturing (1)
- Divestment (1)
- Domestic fuel consumption (1)
- Domestic sector (1)
- Duty of care (1)
- EU-REACH (1)
- Earth Sciences (1)
- Earth summit (1)
- Ecolabelling (1)
- Ecologic footprint (1)
- Ecological resilience (1)
- Education (1)
- Efficiency measures (1)
- Effizienzfabrik (1)
- Ehs (1)
- Emission relocation (1)
- Ems (1)
- Energieeffizienz (1)
- Energy Intensity by Sector (1)
- Energy contracting (1)
- Energy efficiency directive (1)
- Energy transition (1)
- Engineering excellence (1)
- Enhipro (1)
- Environment (1)
- Environmental Contracting (1)
- Environmental Engineering (1)
- Environmental balance (1)
- Environmental capital (1)
- Environmental labeling (1)
- Environmental management accounting (1)
- Environmental profit and loss statement (1)
- Environmental standard (1)
- Environmentally Weighed Material Consumption (1)
- European Comission (1)
- European Green Cars Initiative (1)
- Evaleau (1)
- Events (1)
- External effects (1)
- Fifa (1)
- Fishery (1)
- Fmd (1)
- Food footprint (1)
- Food production (1)
- Ford (1)
- Forest ecosystems (1)
- France (1)
- Free trade (1)
- Freighter travel (1)
- Full cost accounting (1)
- GHG mitigation (1)
- Ghg reduction goals (1)
- Global compact (1)
- Global justice (1)
- Global warming potential (1)
- Green building (1)
- Green business models (1)
- Green consumers (1)
- Green deal (1)
- Green new deal (1)
- Greenwash (1)
- HVAC (1)
- Happy life years (1)
- Harmonization (1)
- Harze (1)
- Hdpe (1)
- Human development index (1)
- Human trafficking (1)
- ILCD Handbook (1)
- IMDS (1)
- IPCA (1)
- IPCC (1)
- ISO 14015 (1)
- ISO 14031 (1)
- ISO 14064 (1)
- ISO 14067 (1)
- ISO-14000 (1)
- ISO-14008 (1)
- ISO-14025 (1)
- ISO-14046 (1)
- Impact category (1)
- Incentive (1)
- Incentive based pay (1)
- Incineration (1)
- India (1)
- Industry-4-0 (1)
- Information design (1)
- Input output (1)
- Input output databases (1)
- Input output economics (1)
- Inreff (1)
- Intellectual property (1)
- Internalization of externalities (1)
- International standards (1)
- Interplant collaboration (1)
- Iso 14001 (1)
- Jevons paradox (1)
- Klimawandel (1)
- Konsumguter (1)
- Kuznets curve (1)
- LIFE AskREACH (1)
- Lieferkettengesetz (1)
- Life cycle analysis (1)
- Life cycle perspective (1)
- Life style (1)
- Linkedin (1)
- Living planet report (1)
- Long-Term Pay (1)
- Material consumption (1)
- Material flow modeling (1)
- Material flowcosts (1)
- Material footprint (1)
- Medical device regulation (1)
- Metal industry (1)
- Mexico (1)
- Monetize external costs (1)
- Montreal Protocol (1)
- Municipal solid waste (1)
- Natural Cost Accounting (1)
- Nature conservation (1)
- Nitrate pollution (1)
- Nutrients balance (1)
- Nutrients cycle (1)
- OECD Environment Policy Committee (1)
- Okobilanzdatenbanken (1)
- Okolabelling (1)
- Okologischer fusabdruck (1)
- Online Resource Efficiency Platform OREP (1)
- Operational efficiency (1)
- Outsourcing (1)
- PET (1)
- PFAS (1)
- Pas (1)
- Philippines (1)
- Pilot program (1)
- Plastic industry (1)
- Polio (1)
- Pollution haven hypothesis (1)
- Process engineering (1)
- Process improvement (1)
- Process system engineering (1)
- Product stewardship (1)
- Product sustainability (1)
- Production based CO2 Productivity (1)
- Production planning (1)
- Produktlebensdauer (1)
- Prop 65 (1)
- Protection proprietary data (1)
- Qatar (1)
- Quality (1)
- Quality journalism (1)
- ROHS (1)
- Rapid prototyping (1)
- Refuse derived fuel plant (1)
- Renewable energy in manufacturing (1)
- Renewable methane (1)
- Renewable process heat (1)
- Renewable raw material (1)
- Resource flows (1)
- Retailer (1)
- Rio20 summit (1)
- Rolf Dobelli (1)
- Rules (1)
- Sap (1)
- Sfdr (1)
- Shopping rage (1)
- Smart grid (1)
- Social ecological resilience (1)
- Solar thermal energy (1)
- Sorgfaltspflichtengesetz (1)
- South africa (1)
- Soy milk (1)
- Stakeholder management (1)
- Supermarket chain (1)
- Sustainability indicators (1)
- Sustainability performance (1)
- Sustainability strategy (1)
- Sustainable architecture (1)
- Sustainable construction (1)
- Sustainable living (1)
- Sustainable process index (1)
- Sustainable resins (1)
- Sustainable resource management (1)
- Sydney (1)
- System analysis (1)
- TSCA (1)
- Telecommunications (1)
- Tobias viere (1)
- Total material consumption (1)
- Treibhauspotenzial (1)
- Turkey (1)
- UK CA (1)
- University (1)
- Upcycling (1)
- VDMA (1)
- Vertical cooperation (1)
- Waste prevention (1)
- Water abstraction rate (1)
- Water extraction (1)
- Wind power (1)
- World cup (1)
- World vegan day (1)
- Yet (1)
- Zero carbon city (1)
- Zero emission mobility (1)
- academia (1)
- acidification (1)
- air quality (1)
- aluminum (1)
- amazon (1)
- antarctic ozone hole (1)
- apocalypse (1)
- apple (1)
- assessment (1)
- atmospheric carbon measurement (1)
- background database (1)
- battery change station (1)
- bike sharing (1)
- bio capacity (1)
- bio-economy (1)
- biocapacity (1)
- biological gas treatment (1)
- blogs (1)
- books (1)
- business opportunity (1)
- car (1)
- carbon free city (1)
- carbon leakage (1)
- carbon management (1)
- carbon management 2 (1)
- carbon reduction (1)
- carbon tax (1)
- carbon-neutral travel (1)
- cargo shipping (1)
- carton (1)
- certification (1)
- change (1)
- climate impact (1)
- climate neutral (1)
- co2 fusabdruck (1)
- cogeneration (1)
- combined reporting (1)
- commons (1)
- cooperation along product (1)
- cradle to cradle (1)
- csrd (1)
- de-growth economy (1)
- digital battery passport (1)
- ecarus (1)
- eco design (1)
- ecoinvent (1)
- ecological tax reform (1)
- ecosystem disturbance (1)
- efficiency investment (1)
- efficient construction (1)
- energy efficiency in production (1)
- energy sources (1)
- environmental accounting (1)
- environmental impact data (1)
- environmental management system (1)
- environmental performance indicator (1)
- environmental technology verification (1)
- environmentally friendly raw materials (1)
- esg (1)
- fashion (1)
- food loss (1)
- food sector (1)
- geopolymer cement (1)
- green Christmas (1)
- green buildings (1)
- green paradox (1)
- green production (1)
- greenhouse (1)
- handprinting (1)
- holistic sustainability (1)
- lca recommendations (1)
- lcia (1)
- lifecycle (1)
- logitech (1)
- management models (1)
- material flow balance (1)
- material losses (1)
- material-flow-accounts (1)
- media (1)
- modeling (1)
- nuclear phase out (1)
- policy instruments (1)
- politics (1)
- post oil age (1)
- product environmental footprint (1)
- production circle (1)
- ressource efficiency analysis (1)
- saving potentials (1)
- scope 3 (1)
- season's greetings (1)
- smart meter (1)
- social cost accounting (1)
- stranded assets (1)
- sustainability control (1)
- sustainability projects (1)
- sustainable products (1)
- tajikistan (1)
- textile industry (1)
- textile refinement (1)
- toyota (1)
- trade (1)
- transport emissions (1)
- umweltbilanz (1)
- urban carbon emissions (1)
- velib (1)
- volvo (1)
- waste air treatment (1)
- waste hierarchy (1)
- wastewater (1)
- water stress (1)
- wind gas (1)
- world statistics day (1)
- zero growth (1)
- Ökologischer Fußabdruck (1)