The cost of material losses is not always obvious
In a production process, raw material that does not become part of the final product can represent much more than a disposal cost. Losses may also embody the costs of purchasing, transport, storage, energy, processing and treatment. When these costs are spread across different cost centres, the economic significance of material losses can remain hidden.
Material Flow Cost Accounting (MFCA) is an environmental management accounting tool that tracks material flows and stocks in physical units and associates costs with those flows. Its purpose is to make the costs of both products and material losses visible, supporting decisions to improve material and energy efficiency.
How it works
An organisation defines quantity centres and tracks inputs, outputs and losses at each relevant stage. Flows are quantified in physical units — for example, kilograms or tonnes — and associated costs are allocated consistently. This helps teams identify where losses occur and assess the business case for improvement measures.
ISO 14051 establishes the general MFCA framework. ISO 14052 provides guidance for applying MFCA across a supply chain, while ISO 14053 describes a phased approach that organisations of different sizes and levels of maturity can adopt. ISO 14051 was confirmed in 2025 and remains current.
Benefits and interpretation
MFCA can reveal opportunities to reduce waste and material and energy consumption while supporting cost reduction. A case study cited in the original 2020 publication, from a German textile manufacturer, reported improvements in cotton use, productivity and emissions. Those results are specific to that case and should not be treated as a universal expectation.
MFCA complements, but does not replace, other environmental management tools or LCA. MFCA focuses on cost and flow information within an organisation or supply chain; LCA assesses potential environmental impacts across a life cycle. Used together, they can support decisions that consider both operational efficiency and broader environmental consequences.