-
Review
n
of SNSW
MFCA
buco
ronmThiwhcernwleethofac
ieve husinesccounw to srove echikaws been
t, these are largelyearchers played amentation processo and
Hirao, 2011;the presence of
vince managers ofr example, at the
be more than double what would usually be reported in thenancial
statements, management remained unconvinced of themerits associated
with EMA in general and argued that the orga-nisation was already
efcient.
While the normative origins associated with MFCA are
notproblematic in and of themselves it can be argued that, if the
takeup of MFCA by business is to improve, it is now necessary
to
* Corresponding author. Tel.: 61 410 468 523; fax: 61 8 830
20992.E-mail addresses: [email protected] (K.L. Christ),
roger.burritt@
mq.edu.au (R.L. Burritt).1 Environmental Management Accounting
being the term used to describe the
integration of physical environmental information into the
management account-ing system. EMA incorporates a variety of tools
that can be physical or monetary;past or future-oriented; routinely
generated or produced on an ad-hoc basis; and,nally, they can have
either a short or long-term focus. For a comprehensive
Contents lists availab
Journal of Clean
journal homepage: www.els
Journal of Cleaner Production xxx (2014) 1e12coverage of
available options readers are advised to consult Burritt et al.
(2002).Mackenzie Paper Division paper mill in Canada, Gale (2006)
foundthat while an MFCA approach revealed environmental expenses
toSeptember 2011 by the International Organization for
Standardi-zation (ISO) of the ISO 14051 standard for material ow
costaccounting.
MFCA has been described as among the most basic Environ-mental
Management Accounting (EMA) tools1 (Jasch, 2006;Schaltegger and
Wagner, 2005). The data afforded by MFCA also
conceptual. Although limited case studies do exisaction-based
projects in which experienced rescentral role in facilitating the
adoption and imple(Heupel andWendisch, 2003; Jasch, 2006;
NakanSchaltegger et al., 2012). Furthermore, even inexperienced
researchers it may be difcult to conthe merits associated with MFCA
activity. Fotool that can support eco-efcient decisions. The
potential impor-tance of MFCA has been further recognised with the
release in
than answers.To date, extant research on MFCA has been
predominantlyEnvironmental management accountingReview
1. Introduction
With increasing pressure to achreduced environmental impacts,
baccess to tools that enable them to aputs to their operations with
a viedecisions that simultaneously impmental performance (Kokubu
and Tarial ow cost accounting (MFCA)
hahttp://dx.doi.org/10.1016/j.jclepro.2014.09.0050959-6526/ 2014
Elsevier Ltd. All rights reserved.
Please cite this article in press as: Christ, K.Cleaner
Production (2014), http://dx.doi.org 2014 Elsevier Ltd. All rights
reserved.
igher productivity withs organisations requiret for all inputs
and out-upporting eco-efcientconomic and environ-a, 2013, p. 351).
Mate-suggested as one such
provides a foundation for the development of further
environ-mental management accounting activities which may include
in-vestment appraisal, environmental impact assessment and shortand
long term environmental budgeting (Burritt and Schaltegger,2001;
Jasch, 2006; ISO, 2011). Based on these arguments it wouldbe
reasonable to assume knowledge concerning MFCA would (orshould) be
among the most developed topics within the EMAliterature. However,
a review of available publications suggests thatdespite 15 years
research in this eld, there remain more questionsISO 14051 scope of
application within companies and broadening of methods for
investigation is then outlined.
Research agenda counting tools used to improve performance. An
agenda identifying promising avenues for research, theMaterial ow
cost accounting: a review a
Katherine L. Christ a, *, Roger L. Burritt b
a Centre for Accounting, Governance and Sustainability, School
of Commerce, Universityb Department of Accounting and Corporate
Governance, Macquarie University, Sydney,
a r t i c l e i n f o
Article history:Received 28 November 2013Received in revised
form30 August 2014Accepted 2 September 2014Available online xxx
Keywords:Material ow cost accounting
a b s t r a c t
Recent times have seen theenergy usage. Material owa new
international enviconsideration by business.develop a research
agendacost accounting tool. Conaccounting; the lack of knoand
statistical research mapplicability beyond manuL., Burritt, R.L.,
Material ow/10.1016/j.jclepro.2014.09.005d agenda for future
research
outh Australia, GPO Box 2471, Adelaide, SA 5001, Australia2109,
Australia
siness world challenged to improve efciency by reducing its
material andst accounting has been suggested as a management tool
that can assist andental management accounting standard, ISO 14051,
has emerged for
s paper presents a review of extant MFCA literature, the purpose
being toich will provide a foundation for future development of the
material ows are raised about the absence of theorising behind
material ow costdge and application of the tool in practice; the
need for survey, interviewds to supplement case studies; lack of
systematic evidence of the tool'sturing and in different rm sizes;
and complementarity with other ac-
le at ScienceDirect
er Production
evier .com/locate/ jc leprocost accounting: a review and agenda
for future research, Journal of
-
and stocks of materials in processes or production lines in
bothphysical andmonetary units (ISO, 2011, p. 3).2MFCA is
underpinned
Cleaner Production xxx (2014) 1e12establish what is currently
known about the direction of researchon the topic. This knowledge
can then be used to inform thedevelopment of a pragmatic research
agenda. With the release ofISO 14051 the future is likely to see
increased interest inresearching MFCA techniques. In order to be
effective it is impor-tant this research be placed in the context
of what is already knownand what needs to be known. Accepting that
contemporary orga-nisations require access to management tools that
supportimproved resource efciency and reduced environmental
impact,this paper utilises a literature review to develop a greater
under-standing of MFCA, the purpose being to develop a research
agendaby which knowledge can be improved and the implementation
ofMFCA activities by organisations further promoted and
improved.
The remainder of the paper is arranged as follows. The
nextsection provides a basic overview of what MFCA is and places it
inthe context of more generic EMA knowledge and development.Section
3 discusses the method used to undertake the literaturereview.
Section 4 covers the development of MFCA as a manage-ment tool.
This is followed by section 5 in which the MFCA processis
discussed. Empirical evidence concerning MFCA in practice
issynthesised in Section 6, with Section 7 summarising what
iscurrently known on the topic with a view to identifying what
needsto be known via the presentation of a research agenda. Section
8then concludes the paper.
2. What is material ow cost accounting?
The purpose of this section is to provide a basic overview
ofmaterial ow cost accounting. The discussion will commence
withbrief mention of EMA as the larger discipline from which
MFCAemerged and is closely aligned. This is followed by a basic
overviewof MFCA and what the practice entails with the research
questionpresented towards the end of the section.
2.1. Generic environmental management accounting background
With population growth and increased demand for nite re-sources
in the face of an often limited supply, recent years haveseen
mounting interest in developing business tools that supporthigh
levels of productivity while simultaneously minimisingresource use
and adverse environmental impacts. The need for amore integrated
approach to corporate economic and environ-mental management led to
the development in the 1990s ofEnvironmental Management Accounting
(EMA) (Christ and Burritt,2013). EMA provides a starting point to
redress the oft citedshortcomings associated with traditional
management accountingwhich has been criticised for its failure to
explicitly considerenvironmental information; a situation which may
lead to awedconclusions (de Beer and Friend, 2006; Godschalk,
2008;Schaltegger and Burritt, 2000; Tsai et al., 2012). Thus EMA
offersorganisations an information system in which physical and
mon-etary data concerning how business activities impact on, and
areimpacted by, environmental issues is explicitly considered
(Burrittet al., 2002). The further relevance of EMA to business
becomesclear upon reviewing extant case studies presented in the
academicand professional literature in which the potential for cost
savings,more efcient material use, and increased revenue streams
havebeen consistently supported (Altham, 2007; Burritt et al.,
2009; deBeer and Friend, 2006; Deegan, 2003; Ditz et al., 1995;
Schalteggeret al., 2012; Van and Gartner, 2011).
The last two decades have seen the EMA literature develop
toincorporate a number of different tools. Lang et al. (2005)
suggestMaterial Flow Cost Accounting (MFCA) is among the most
funda-mental and well-developed of these. The recently released
ISO
K.L. Christ, R.L. Burritt / Journal of214051 standard denes MFCA
as a tool for quantifying the ows
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005by the premise that
all materials purchased by an organisationmusteventually leave as
either product or waste, also referred to as non-product output or
negative product (Fakoya and van der Poll, 2013;Jasch, 2009), and
Jasch et al. (2010) describe MFCA as the startingpoint for the
implementation of EMA activities.
2.2. A basic overview of MFCA
MFCA incorporates two distinct elements: physical and mone-tary.
Within the EMA literature, MFCA falls within the group oftools that
come under the umbrella term environmental cost ac-counting
(Papaspyropoulos et al., 2012). As with environmentalcost
accounting, although generally classied as a monetary EMAtool, MFCA
relies on access to corresponding physical informationbut
specically about materials and energy ows and is usuallyclassied as
past-oriented with a focus on short-termmanagement(although the
information provided by MFCA can be used to sup-port the
implementation of other future-oriented EMA tools suchas various
forms of environmental budgeting) (Bennett et al., 2013,p. 8;
Burritt and Schaltegger, 2001;Wendisch and Heupel, 2005).
Inaddition, the information made available via implementation of
anMFCA system is expected to be generated on a routine basis
(forfurther information, please refer to the comprehensive
frameworkfor EMA presented in Burritt et al., 2002).
Jasch (2011, p. 256) submits the reason EMA places
especialemphasis on the use, ows and nal destiny of energy,
water,materials and wastes is because (1) use of energy, water
andmaterials, as well as the generation of waste and emissions,
aredirectly related to many of the environmental impacts of
organ-isational operations; and (2) materials purchase costs are a
majordriver in many organisations. Thus by focussing on material
andenergy ows, as well as their related costs, MFCA provides
afoundation by which opportunities for improved eco-efciency
areable to be more clearly articulated and understood (Scavone,
2006).In addition, prior research has shown the costs associated
withwasted materials can amount to as much as 40e70% total
envi-ronmental expenses for individual organisations;
environmentalexpenses being dened as those business expenses that
are asso-ciated with impacts on the environment which includes the
cost ofenvironmental protection (Bautista-Lazo and Short, 2013;
Jasch,2009). In consequence, it can be argued the effective
manage-ment of material and energy ows constitutes an important
un-dertaking for contemporary organisations, both economically
andenvironmentally.
2.3. Context of the research and research question
Yet despite the arguments presented in the preceding
para-graphs, knowledge concerning MFCA in practice remains
under-developed. Furthermore, a comprehensive agenda to guide
currentand future research in this area has yet to be developed.
Thus thepurpose of this paper is to provide a synthesis of current
knowledgeconcerning MFCA and to present a number of directions for
futureresearch bywhich knowledge can be advanced and the further
takeup of MFCA by business promoted and improved. In doing so
thefollowing research question will be addressed: (RQ1) How can
ac-ademic research be used to further understanding of current
MFCAdevelopment? The next section will discuss the method used
toinvestigate this research question.
2 Materials in this context is generally held to include energy
and water (ISO,2011, p. 3).
cost accounting: a review and agenda for future research,
Journal of
-
3. Method
K.L. Christ, R.L. Burritt / Journal of CleaIn order to
investigate the research question presented in Sec-tion 2, this
study utilised a review of extant MFCA literature. Insummary, the
purpose of the research was to review, critique, andsynthesize
representative literature on a topic [] such that newframeworks and
perspectives on the topic are generated (Torraco,2005, p. 356;
Neuman, 2006). Torraco (2005, p. 363) suggests thatamong the
primary reasons for undertaking a literature review is todevelop
and present a research agenda that ows logically fromthe critical
analysis of the literature and it was with this purpose inmind that
the current study was undertaken (also see Neuman,2006).
Literature for inclusion in the review was sourced from
thefollowing databases: Science Direct, EBSCO, Emerald
ManagementPlus, JSTOR, ProQuest, SpringerLink, Taylor and Francis
and WileyInterscience. Given the emerging and contemporary nature
ofMFCA as a topic, keyword searches were limited to material owcost
accounting, ow cost accounting, ISO 14051 material andenergy ow
cost accounting, energy ow cost accounting andMFCA. Database search
tools were set to order references based onrelevance to these
search terms.
The resources identied via the aforementioned means werefurther
supplemented with ofcial documents from governmentand
non-government organisations in which MFCA was among theprimary
concerns. These references include resources from TheInternational
Organization for Standardization (ISO), Federal Min-istry for the
Environment in Germany, Ministry of Economy, Tradeand Industry
(METI) in Japan, and the International Federation ofAccountants
(IFAC).
Once identied the academic references were subjected to
apreliminary word search in line with the keywords provided
above.This undertaking was used for the purpose of screening and
toensure reference to MFCAwas not limited to a passing comment ora
sole item located within the reference list. Any documentsdeemed
irrelevant to the topic on this basis were discarded.
Uponcompletion of this process the remaining resources were read
infull with relevant data documented against individual references
intable format. The information gleaned from this process allowed
acomprehensive understanding of the topic to be developed
whichprovides the foundation for the information presented in
theremainder of this paper.
In order to appreciate how academic research can be used to
aidunderstanding of current MFCA development it is necessary to
rstunderstand what MFCA is, how the practice developed and thesteps
involved in the implementation process. This information isrequired
to contextualise the empirical evidence on the topic whichis
addressed later in the paper. Hence the following section
willcommence the review by considering the development of MFCA
ingreater detail.
4. The development of MFCA as a management tool e a
briefoverview
MFCA was developed in the late 1990s by the Institut
frManagement und Umwelt (IMU)3 in Augsburg, Germany, under thename
ow cost accounting (Federal Ministry for the Environment,2003;
METI, 2007). The potential relevance of the practice
tomanufacturing concerns attracted the attention of Japanese
au-thorities and in 2000 the Japanese Ministry of Economy, Trade,
andIndustry (METI) began promoting a modied version of MFCA tothe
Japanese business sector (Kokubu and Tachikawa, 2013). An3
Institute of Management and the Environment.
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005important element of
this process was the Environmental Man-agement Accounting Promotion
Projectwhich commenced in 1999(Onishi et al., 2009). The Japanese
effort culminated with therelease of a Guide for Material Flow Cost
Accounting published byMETI in March 2007 (METI, 2007). To date,
while it can be arguedGermany and Japan have been the prime
instigators at the forefrontof global MFCA development, interest in
the practice is growing andemanating from regions as diverse as
Europe, Asia, the Middle Eastand North America (Jasch and Savage,
2008; Jindrichovska andPurcarea, 2011; Kokubu and Tachikawa,
2013).
The Japanese and German versions of MFCA are often
discussedseparately within extant literature. It is possible this
situation isattributable to the difference in system boundaries
recommendedunder each approach. The Japanese version, for example,
has pri-marily been concerned with product lines or processes
(IFAC,2005). The German version, on the other hand, is more
interestedin facility wide management (IFAC, 2005). Nonetheless, it
can beargued recent years have seen a more pragmatic stance on the
partof MFCA advocates and there is now greater acceptance that
thesystem boundaries associated with any MFCA experiment willlikely
be determined by both organisational circumstance and theunderlying
reasons for implementation (Kokubu and Tachikawa,2013).
Furthermore, regardless of the level at which MFCA isimplemented
(company, facility, cost centre, process or product),the underlying
principles will remain essentially unchanged (Jasch,2003b). While
MFCA can undoubtedly be implemented at differentorganisational
levels, it has been suggested that initial adoption ismore usual at
the company level given this form of aggregate data ismore readily
available in most operations (Jasch, 2003b).
Recent years have seen even further development in MFCA.
Inparticular the success of the practice when applied to
Japanesecompanies became the catalyst in 2008 for a submission by
theJapanese Industrial Standards Committee (JISC) to the
InternationalOrganization for Standardization. A working group was
subse-quently created with the culmination of their efforts being
therelease in September 2011 of the rst edition of ISO 14051:
MaterialFlow Cost Accounting (Kokubu et al., 2009; Trappey et al.,
2013).Countries involved with the development of this standard
include:Japan, Germany, Brazil, The United Kingdom, Finland,
Malaysia,Mexico and South Africa (Schmidt and Nakajima, 2013). In
linewiththe published preamble, the overarching aim of ISO 14051 is
tooffer a general framework for material ow cost accounting
(ISO,2011, p. v). In addition, ISO 14051 provides information
concerningcommon terminologies, objectives and principles,
fundamentalelements and an overview of the MFCA implementation
process(ISO, 2011, p. v).
In keeping with more recent publications ISO 14051
placesespecial emphasis on the universal applicability of MFCA to
busi-ness (Kokubu and Tachikawa, 2013). While it can arguably
becontended MFCA is likely to be more useful to
organisationsinvolved with the manufacture of physical products
(IFAC, 2005),there is growing consensus the practice can also be
applied in non-manufacturing settings which include organisations
located ineither the service or not-for-prot sectors (Jasch,
2009;Papaspyropoulos et al., 2012). Indeed, ISO 14051 argues MFCA
isapplicable to any organization that uses materials and
energy,regardless of their products, services, size, structure,
location, andexisting management and accounting systems (ISO, 2011,
p. 1).
Finally, as with EMA, MFCAwas developed primarily to
evaluatematerial ows within individual organisations, the purpose
beingto support eco-efcient decisions that enhance resource
efciencyand simultaneously improve the economic and
environmentalperformance of the entity (METI, 2007). However, in
more recentyears there has been growing interest in howMFCA
techniques can
ner Production xxx (2014) 1e12 3be extended to assist with
supply chain management (Jasch, 2011;
cost accounting: a review and agenda for future research,
Journal of
-
cess. Such an overview is provided in the following section.
MFC
Cleaner Production xxx (2014) 1e125. The MFCA process
Despite minor differences in terminology and the
systemboundaries used, the process of implementing MFCA has
beenconsistently represented in extant literature. For ease of
under-standing a ow chart displaying the main steps involved in
thisprocess is provided in Fig. 1. Once an appropriate system
boundaryhas been agreed, it is widely accepted the rst step in
implementingany MFCA experiment is to develop a basic understanding
of theows of material and energy throughout the organisation. This
isachieved via a visual representation commonly referred to as
aJindrichovska and Purcarea, 2011; METI, 2007; Schrack andPrammer,
2013). For example, between 2008 and 2011 the Japa-nese METI
conducted a project examining this potential by intro-ducing MFCA
into 50 supply chains (Kokubu and Tachikawa, 2013).The capacity to
extend MFCA to include both up and downstreamsupply chain partners
has also been explicitly recognised in therecently released ISO
14051 standard (ISO, 2011).
As can be seen from the preceding paragraphs, the last 15
yearshave witnessed the rapid development of MFCA techniques.
How-ever, in order to place extant evidence on the topic into
context, it isnecessary to rst provide a brief overview of the
basic MFCA pro-
Fig. 1. The
K.L. Christ, R.L. Burritt / Journal of4ow model (Kokubu and
Tachikawa, 2013; Scavone, 2006; Strobeland Redmann, 2002). Flow
models are essentially a heterogeneousdepiction of organisational
processes and, as such, each model willdiffer according to the
specic activities in which individual orga-nisations are engaged.
Furthermore, while ow modelling repre-sents an important step in
the implementation of MFCA, Heupeland Wendisch (2003) suggest the
construction of a ow modelmay even be a catalyst for organisational
improvement when usedin isolation from additional action. Indeed,
this information can beused as the basis for undertaking material
or substance ow anal-ysis which, while lacking a monetary element,
may assist inimproving the organisation's environmental
performance. Whilethere are numerous software packages that can be
used for thepurpose of constructing a ow model, Kokubu and
Tachikawa(2013) suggest computer generated models are not essential
withmanual representations assembled using paper or post-it
notesoften equally effective.
Once the ow model is complete the next step
incorporatesassigning values representing the amount of materials
and energythat pass through or are stored within each step in the
ow model.While it is clearly desirable to use actual gures for this
purpose, it
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005is widely accepted
that in cases where tangible quantities are un-available estimates
can provide a suitable proxy provided there isno reason to suspect
excessive inaccuracy (METI, 2007). Regardlessof how these values
are obtained, it is important that all items beconverted into
comparable measurement units (for example kilo-grams) necessary for
the next step in the MFCA process.
The purpose for assigning values to the ow model is to
estab-lish a material balance also referred to as a mass
balance,inputeoutput balance or an eco-balance (IFAC, 2005). As
noted inISO 14051 (ISO, 2011, p. 5):
Because mass and energy can neither be created nor
destroyed,only transformed, the physical inputs entering a system
shouldbe equal to the physical outputs from the system, taking
intoaccount any inventory changes within the system.
The notion of a balance described above borrows heavily fromthe
law of conservation in physics (Huang et al., 2012; Victor et
al.,1998). Thus, energy and mass are never lost and there is a
well-established scientic basis for the development of a
materialsbalance and it is important that any signicant gaps in
this data beinvestigated.
Once the material balance is complete it is necessary to
assignmonetary values for every input and output contained for each
stepin the ow model. MFCA has come to recognise several
categories
A process.of costs. These include: material costs; system costs
which incor-porate the expense associated with handling materials
and energyin-house and includes labour, depreciation and transport
costs; andnally, waste management costs (Kasemset et al., 2013).4
There issome debate concerning the best way to account for energy
withsome authors advocating recognition within a separate cost
cate-gory, however, this decision is generally left to the
discretion ofindividual organisations (Jasch, 2011; METI, 2007).
Indeed, a 2005study by Kokubu and Nashioka reports organisations
are morelikely to consider energy costs in their environmental
accountingactivities as opposed to generic material costs (Kokubu
andNashioka, 2005).
Further to the more basic issues associated with material useand
cost allocation, ISO 14051 also includes explicit
guidanceconcerning how to deal with costs that are carried from
one
4 Readers interested in obtaining a further understanding of
these cost categoriesare advised to consult ISO 14051 (ISO, 2011),
Jasch (2009) and METI (2007).
cost accounting: a review and agenda for future research,
Journal of
-
quantity centre5 to another (i.e. when output from one
quantitycentre becomes an input for another) (ISO, 2011). This
standardalso covers the treatment of internally recycled materials.
The lastpoint is especially pertinent as materials that are
recycled orreused within the system boundary limit the production
of waste
K.L. Christ, R.L. Burritt / Journal of Cleaas well as reduce the
need for virgin resources. Therefore, inter-nally recycled
materials can have a positive impact on both theeconomic and
environmental performance of the entity (Jasch,2009; Sarkis, 2012).
A common example of a material that isrecycled in this way is water
which can sometimes be used forseveral processes, provided a
certain level of quality is maintained,before leaving the system as
wastewater. The above said, ISO 14051maintains that the fact
materials have to be recycled at all repre-sents evidence of
inefciency within the original process (ISO,2011). Nonetheless, it
is acknowledged the realisation of zero-waste is not always
possible and as such the development of aclosed-loop system that
limits demand for resources is likely topresent the most realistic
option for many entities (Burritt et al.,2009; Jasch, 2009;
Staniskis, 2012).
While the development of a mass balance ow model and
theallocation of relevant costs are without doubt important
stepswithin the MFCA process, they are not an end in themselves.
Thus itis necessary for management to summarise, evaluate and
interpretthese results. It is also important that this data be
communicated torelevant managers and staff who are likely to be
familiar with theactivities undertaken within individual
cost/quantity centres. Oncethis is done potential improvement
opportunities can be identiedand appropriate action taken (ISO,
2011; Schaltegger and Csutora,2012). It is then necessary to
re-evaluate material ows, stocksand costs on a regular basis as
this allows for the comparison ofplanned activities to actual
results, as well as facilitating a programfor continuous
improvement which will improve eco-efciency,and reduce both costs
and adverse environmental impacts (Lang-Koetz et al., 2006; METI,
2007). This may involve the use of envi-ronmental budgeting or
environmental key performance indicators(KPIs) (Burritt and
Schaltegger, 2001; Schaltegger et al., 2012). Theaforementioned
process is well articulated in ISO 14051 which, likemany other
standards within the ISO 14000 and 9000 series, en-courages
commitment to a PDCA cycle of continuous improvement(ISO, 2011;
Kokubu et al., 2009).6
In summary, when used in conjunction with appropriate plan-ning
and a program for continuous improvement, the preparationof a ow
model, quantication of material and energy inputs,outputs and
stocks, and allocation of relevant costs as requiredunder MFCA
seeks to serve several important purposes. These mayinclude:
Allowing areas of inefciency to be identied and understood;
Improved efciency and a reduction in direct material costs; A
reduction in the amount of waste generated and reducedecological
impact;
A reduction in other manufacturing costs (e.g. waste
handling,treatment and associated infrastructure costs);
More accurate product costing; Incentives for innovation;
Improved inter-departmental communication concerningresource use;
and
Improved management control.
5 A quantity centre is dened in the ISO 14051 standard as
selected part of partsof a process for which inputs and outputs are
quantied in physical and monetaryunits (ISO, 2011, p. 4).
6 PDCA is an acronym which represents Planning, Doing, Checking
and Acting(ISO, 2011).
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005(IFAC, 2005; Kokubu
and Tachikawa, 2013; METI, 2007; Onishiet al., 2009; Scavone, 2005;
Schaltegger et al., 2002, 2012;Scheide et al., 2002).
Drawing on the list of potential benets presented above,
thereseems ample incentive for business entities to engage with
MFCA.Nonetheless it has also been observed that take up of the tool
inpractice has generally been quite limited. In order to
understandthis paradox there is a need to consider existing studies
and theresults from empirical investigation.
Before proceeding it should be claried that the main purpose
ofthis section was to provide an overview by which the
ensuingdiscourse can be more easily understood by those unfamiliar
withMFCA and its development. Readers interested in a more
detailedunderstanding of the MFCA process than that provided here
areadvised to consult one of the many publications available on
thetopic (e.g. ISO, 2011; Jasch, 2009; METI, 2007). The following
sec-tion will now extend the review by considering extant evidence
ofMFCA in practice, the purpose being to determine patterns
inadoption, shortcomings in current knowledge and areas in
whichfurther information is required to move the understanding of
MFCAforward. This informationwill then be used to inform
developmentof the research agenda which is presented in Section
7.
6. Empirical evidence on MFCA in practice
As previously suggested, thus far empirical evidence
concerningMFCA in practice has primarily centred on action-based
projects. Inthis context action-based is used to describe study in
which theprincipal researchers have taken an active role in
providing theexpertise and oversight required for the development
of MFCAwithin the organisation(s) being studied. It can be argued
this is notunexpected given the contemporary and somewhat
normativenature of the MFCA literature. Nonetheless, in order to
move theMFCA agenda forward, organisations need to be
sufcientlyconvinced on the merits of the practice and prepared to
pursueimplementation in the absence of academic assistance. In
order tounderstand how this can be achieved empirical evidence
isrequired and there remain many questions in need of answers.Hence
this section presents an overview of prior research, which
ispredominantly case-based.
Although the purpose of this section was to provide a
detailedoverview of current work in the MFCA area, the discussion
alsocomes with a caveat. The literature reviewed for this paper
waslimited to those studies available in English. While
acknowledgingadditional publications may exist, especially in
German and Japa-nese, these resources were not considered within
this review.
6.1. Evidence of low engagement in practice
The rst thing that becomes apparent upon reviewing theliterature
is that, thus far, essentially all empirical work has beenconned to
action-based case studies. Indeed, the authors wereunable to locate
a single survey or interview-based quantitative orqualitative study
in which MFCA was the primary focus. Survey-based research in which
MFCA is mentioned has been primarilyconcerned with attempts to
establish knowledge and the use ofEMA tools in general. For
example, a 2005 survey of Japanesecompanies conducted by Kokubu and
Nashioka (2005) revealedthat, although 73.5% of companies had
knowledge of MFCA as anEMA tool, only 6.5% had partially
implemented it in their opera-tions, and none had totally
implemented the practice (n 185,response rate 21.27%). The authors
attribute the high awarenessof MFCA among business to publicity
efforts in Japan undertaken byMETI. Nonetheless, it is of concern
that so few organisations had
ner Production xxx (2014) 1e12 5started experimenting with
MFCA.
cost accounting: a review and agenda for future research,
Journal of
-
CleIn contrast, a German study conducted in 2010 by
Schalteggeret al. (2011) revealed that only 51.6% of study
respondents re-ported knowledge of material ow analysis (MFA) and,
of these,only 56.3% actually applied the technique within their
businessoperations (n 31, response rate 25.8%). Interestingly,
thesegures represent a relative decrease of 33% and 32% from a
similarstudy undertaken in 2002 (n 44, response rate 36.7%).
Thesendings may offer support for the observation of Schmidt
andNakajima (2013) who suggest that since the state promotion ofow
cost accounting was phased out in Germany, the technique hasbecome
obsolete and is hardly used. Furthermore, it is possibleMFA(and
subsequently MFCA given MFA constitutes a necessary pre-cursor to
MFCA activity) may be less prominent in respondentcompanies, not
because the technique itself is not useful, butbecause
organisations do not know it exists. While certainly
notencouraging, the results from the aforementioned studies are
alsoconsistent with Australian evidence collected by Burritt
andTingey-Holyoak (2012). In reporting on a survey of
professionalaccounting rms located in South Australia, these
researchersfound that while 50% of the sample report using
sustainability-related cost accounting, not one used MFCA (Burritt
and Tingey-Holyoak, 2012) (n 12, response rate 10%). Dobes (2013,
p.255), in discussing a Czech initiative, concurs suggesting
fewcompanies monitor the efciency of energy usage and materialows
within their processes and, as a result, have difculty inmanaging
their resource efciency.
The evidence presented above suggests MFCA may not be a toolthat
is able to sell itself in the manner suggested within thenormative
literature. Furthermore, even when organisations knowabout MFCA,
this does not guarantee they will adopt the practice.Interestingly,
Schaltegger et al. (2011) suggest knowledge andapplication may in
fact be closely related and present evidence thatthe more
well-known an environmental accounting tool is, thegreater the
likelihood of adoption (i.e. the knowledge-applicationgap becomes
smaller). This observation is consistent with theliterature on
diffusion of innovation (Rogers, 2003). Nonetheless,the nature of
this relationship when applied specically to MFCAcannot be assumed
and further investigation is required.
6.2. Case-based research
Extant survey-based evidence from generic EMA studies doesnot
present an overly positive picture for those who would advo-cate
for the increased implementation of MFCA by business. Yetthese
ndings are in stark contrast to the generally positive
resultsreported in the action-based case research upon which most
of theMFCA literature is based. Since the early 2000s the
literature hasconsidered case studies in which the integration of
cost informa-tion with ow management techniques has been examined.
Thesecase studies generally present arguments related to the
signicanceof costs associated with residual materials and
substances that arenot turned into products (Scheide et al., 2002;
Thurm, 2002).Empirical evidence suggests the monetary cost
associated withnon-product output can be as high as 90% of an
organisation's totalenvironmental expense (Gale, 2006; Jasch et
al., 2010; Jasch andDanse, 2005; Jasch and Lavicka, 2006). When
taken in light ofprevious evidence which has found areas of
environmentalexpense can be as high as 22% of total operating costs
(Ditz et al.,1995), the potential benet associated with controlling
and/orreducing non-product output is expected to be signicant in
manycompanies (Burritt, 2004; Jasch and Lavicka, 2006).
Existing case studies demonstrate substantial potential for
or-ganisations to reduce their overall environmental expenses via
amore systematic approach to ow cost accounting (Kokubu and
K.L. Christ, R.L. Burritt / Journal of6Tachikawa, 2013). While
many studies empirically support the
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005potential for
signicant cost reductions and environmental im-provements through
what is commonly referred to as goodhousekeeping activities (Jasch
and Danse, 2005, p. 362; Scavone,2006), in certain cases it may
also be necessary to consider thepotential benet that may accompany
investment in new capitalequipment (Kokubu and Tachikawa, 2013).
For example, in a casestudy from Argentina, Scavone (2006, p. 1285)
shows how MFCAled a sugar cane company to invest USD 350,000 in new
equipmentto improve efciency. As a result of this decision the
company wasable to save USD 72,000 each year with the overall
payback periodbeing ve years. Staniskis and Stasiskiene (2006) also
offer Lithu-anian evidence from a number of case studies in which
it is clearlyshown that capital investment in cleaner production
generallyresulted in vastly improved economic and environmental
perfor-mance with all items having payback periods of 3 years or
less (alsosee Staniskis and Stasiskiene, 2005). Moreover, beyond
the merepurchase of new equipment, Hyrslova et al. (2011) suggest
MFCAmay even provide a catalyst for the development of new and
moreefcient technologies.
As can be gathered from the preceding discussion, much of
thecurrent work investigating MFCA has been concerned
withmanufacturing operations and, in cases where ow charts
areprovided, these generally represent a simple linear
manufacturingprocess, i.e. materials in, work in process, waste and
product out(for example, see Heupel and Wendisch, 2003; Staniskis
andStasiskiene, 2006; Schaltegger et al., 2012). While these
studiesare no doubt important, they do little to demonstrate
whetherMFCA is useful in non-manufacturing settings and, if so,
howMFCAcan best be applied in these organisations. When viewed in
light ofarguments that MFCA can be applied in any business that
uses en-ergy or materials (ISO, 2011; Jasch, 2009), the lack of
data on mul-tiple sectors would appear to represent a major
shortfall in currentknowledge.
As discussed in the previous paragraph, to the current timeMFCA
has been primarily applied in the manufacturing
sector(Papaspyropoulos et al., 2012). Nevertheless, it has also
been sug-gested MFCA can be applied in both the service and
not-for-protsectors (Jasch, 2011; Papaspyropoulos et al., 2012).
While thismay be true, evidence to support this proposition with
regard toeither sector is not well developed. One notable exception
is thestudy of Papaspyropoulos et al. (2012) which considers the
case ofthe Hunting Federation ofMacedonia and Thrace (HFMT), a
not-for-prot organisation located in Greece. The authors conclude
thatMFCA can support the operation of the sector and provide
usefulindications for [] policy decisionmaking (Papaspyropoulos et
al.,2012, p. 141). Recommendations were also made to complementthe
use of environmental cost accounting and MFCA in the
caseorganisation with additional EMA tools, in particular those
with afuture-oriented and/or long-term focus.
6.3. How is MFCA implemented in practice?
The actual manner of MFCA implementation is another
arearequiring further study. To date, while European studies
havegenerally advocated company-wide application and the
integrationof MFCA data into existing practice via advanced IT
options andEnterprise Resource Planning (ERP) systems (an approach
also seenin select Japanese case studies (Onishi et al., 2009) and
morerecently in research to emerge from South Africa (Fakoya and
vander Poll, 2013)), it is accepted not all organisations have
access tosuch sophisticated systems. For example, Heupel and
Wendisch(2003) discuss the implementation of ow cost accounting in
agroup of SMEs (small and medium-sized enterprises) and concludethe
practice can be applied using more simple programming sys-
aner Production xxx (2014) 1e12tems. This was noted as being
especially important in countries like
cost accounting: a review and agenda for future research,
Journal of
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the Czech Republic and Poland where, as of 2003, as few as 15%
ofall SMEs had access to ERP technology (Heupel and
Wendisch,2003).
Deegan (2003) also observed the potential role for ow cost
K.L. Christ, R.L. Burritt / Journal of Cleaaccounting in SMEs.
This potential was specically demonstrated ina project undertaken
in collaboration with the Institute of Char-tered Accountants in
Australia and EPA Victoria, in which EMApractices were introduced
in four different case organisations, all ofwhich included some
form of material ow analysis and environ-mental costing. Like
Heupel and Wendisch (2003), Deegan (2003)advocates the potential
importance of ow cost accounting inSMEs and also makes the
following observation:
Existing accounting systems might be well accepted and havebeen
in place for many years, and therefore it is important thatthe
strengths and weaknesses of existing systems are knownbefore
suggesting changes. What was found to be useful was toconstruct
diagrams to understand how costs are currently beingallocated or
treated. It was useful to then ask: does what iscurrently being
done from an accounting perspective actuallymake sense if one also
considers the physical ow of resources?
In presenting evidence from Costa Rica, Jasch and Danse
(2005)concur with Deegan's observation and Jasch (2003a, p. 76),
drawingon pilot studies from Austria, suggests that a critical
review ofexisting information systems is an important step at
thecommencement of any MFCA pilot study (also see Herzig et
al.,2012; Staniskis and Stasiskiene, 2005).
Recent years have seen further statements suggesting MFCA canbe
applied in any organisation irrespective of existing
accountingand/or environmental management systems (ISO, 2011). This
po-sition would seem to imply MFCA is a standalone system,
however,it has also been suggested that in many cases the
informationrequired for MFCA may already be available from existing
sources(Scavone, 2005, 2006; Schaltegger et al., 2012).7 Thus the
way inwhich MFCA information can (or should) be integrated into
otherorganisational systems remains unclear and offers a
potentiallyfruitful area for future study (Lang-Koetz et al., 2006;
Strobel andRedmann, 2002).
6.4. Evidence from developing economies
As discussed in Section 4, MFCA is a management innovationthat
emanated from projects undertaken primarily in developednations.
Nonetheless, there is growing interest in how MFCAtechniques can be
applied in developing economies. Schalteggeret al. (2012) explored
this potential in the context of a beer brew-ing facility in
Vietnam and were able to demonstrate, via an action-based case
study, that MFCA has enormous potential for identifyingareas of
inefciency and to help ensure improvement efforts weredirected
towards areas where they would make the greatestimpact. Jasch and
Danse (2005) reveal similar ndings in acomparative study of EMA
activity in Austria and Costa Rica andsuggest MFCA may assist in
identifying opportunities for goodhousekeeping which are more
common in emerging economiesgiven environmental regulations tend to
be less stringent in thesesettings. Burritt et al. (2009) further
demonstrate the potential formaterial and energy ow cost
assessments as a post-hoc tool forenvironmental investment
appraisal at a rice mill located in the
7 Note: while many references suggest much of the data required
for MFCA mayalready be available, this is not always the case. Gale
(2006) for example, found at apaper mill in Canada that the
necessary information from existing accounting
systems was more difcult to obtain than expected, especially in
the case of energyand waste costs (Gale, 2006).
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005Philippines (e.g.
material and energy ow cost assessment wasused to evaluate previous
investment decisions in retrospect).Indeed, as developing nations
move to compete in a globalmarketplace that is demanding
increasingly stringent forms ofenvironmental management, MFCA may
offer organisations inthese countries a means of controlling
resource use and a way todemonstrate their commitment to economic
and environmentalefciency. With high levels of economic growth in
recent years, itcan be argued this is likely to be especially
important in countrieslike China and India (Xiaomei, 2004).
6.5. How does MFCA relate to other EMA tools?
It is interesting, given the well-cited work of Burritt et al.
(2002)who suggest MFCA is but one in a framework of possible EMA
tools,that there has been scant research investigating the
comparability,and compatibility, of MFCA with alternate EMA tools
(Lang-Koetzet al., 2006). One of the few studies in this area was
conducted byLang et al. (2005) who, within the context of several
pilot studies,considered the interrelationship between
Environmental Perfor-mance Indicators (EPIs), inputeoutput balance
(otherwise knownas a material or mass balance e see Section 5) and
ow cost ac-counting. The authors conclude that despite being a
potentiallypowerful instrument, ow cost accounting is also less
commonin practice (Lang et al., 2005, p. 148). For example, in the
case ofSchott Glass, Lang et al. (2005, p. 161) observe that EPIs
wereimplemented, and in fact preferred, over ow cost accounting,
therationale being that the organisation already had a good
under-standing of material costs and losses, and that the
complexity of theorganisation's material ows was not high. Whether
this assump-tion represents an accurate reection of Schott Glass's
positionmaybe questioned, however, it is nonetheless concerning
that thecompany failed to see the benet associated with MFCA
activities.When combined with other pilot studies, Lang et al.
(2005, p. 165)conclude:
For many companies, Environmental Performance Indicatorsprovided
regularly and the set up of an inputeoutput balanceevery two or
three years seems to be a good combination forambitious
environmental management. For some companies,ow cost accounting can
be an interesting option to improve theexisting cost accounting
system.
In a related vein Japanese pharmaceutical company,
TanabeSeiyaku, offers an example for how MFCA data can be used
forperformance evaluation and improvement (Burritt and Saka,
2006;Onishi et al., 2009), and the potential role for MFCA in
investmentappraisal and post-hoc investment evaluation has been
observed inboth Schaltegger et al. (2012) and Burritt et al.
(2009). In addition tothese studies, Scavone (2006) offers evidence
from Argentina tosuggest there may be a role for an environmentally
focusedbalanced scorecard in material ow cost management.
Nonethe-less, as with many topics within the MFCA literature,
knowledgeconcerning this proposal is limited and additional
evidence isrequired to support these claims.
Drawing on the discussion presented above, MFCA wouldappear
compatible with a number of supplementary EMA tools(also see
Burritt et al., 2002; Jasch, 2006). Thus it would be inter-esting
to examine the incremental performance benet that isattained when
different tools are used in combination, and withindifferent
contexts (i.e. in large versus small or medium sized
or-ganisations). It may be that in certain situations MFCA is
useful inits own right whereas in other contexts a combination of
tools isrequired to produce equivalent improvements in economic
and
ner Production xxx (2014) 1e12 7environmental performance.
Likewise, it may be that in certain
cost accounting: a review and agenda for future research,
Journal of
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Clecontexts MFCA is less effective than other EMA tools, or
combina-tions of tools, as was found in the study of Lang et al.
(2005).
6.6. Proposed extension of MFCA as a supply chain
managementtool
Finally, there has been substantial interest in recent years
indeveloping a greater understanding of how EMA, and more
spe-cically MFCA, can be used to assist with Supply Chain
Environ-mental Management (IFAC, 2005; ISO, 2011; Jindrichovska
andPurcarea, 2011). The METI Guidebook for MFCA describes
thetransfer of MFCA data to the supply chain as one of the
mostadvanced topics in the hierarchy of MFCA activity (METI, 2007).
Inaddition, if used within the supply chain the data provided
byMFCA could then be used to support further analysis via life
cycleassessment (LCA) (Jasch, 2011; Nakano and Hirao, 2011) and
mayhelp to support the development of closed-loop supply
chainswhich place less demand on virgin resources as described
byWeigand and Elsas (2013). While limited case studies do
supportthe potential for MFCA information to assist with
environmentalsupply chain management (Kokubu and Tachikawa, 2013;
Viereet al., 2007, 2011), problems with the collection of
informationand condentiality of data are also acknowledged (Weigand
andElsas, 2013) and more research on this topic is required.
The above section constitutes a comprehensive coverage ofextant
evidence on MFCA in practice. While it can be observed thatthe
literature in this area is increasing, it could also be argued
thatthere remain more questions than answers. Hence the need
nowexists to move this debate forward. The next section
explicitlyconsiders this need, the purpose being to articulate an
agenda forfuture research in the MFCA eld.
7. Discussion and the way forward
7.1. Implications from existing research
The previous section clearly demonstrates that while knowl-edge
regarding MFCA is certainly increasing, the overall under-standing
of the topic remains limited and further research isrequired.
Numerous studies draw attention to the potential asso-ciated with
MFCA and a number of action-based case studies haveprovided
evidence that would seem to suggest it works. None-theless these
studies are at odds with additional evidence in whichit has been
demonstrated MFCA is not well used in practice. Thus, ifwe accept
the positive results obtained from case-based research,there would
appear to be a role for academic study in seeking tounderstand and
resolve this paradox. Furthering the understandingof MFCA in this
way is essential to nding ways to encouragediffusion of the
practice in diverse organisations.
Drawing on the discussion presented above the most
logicalquestion with which to commence this agenda would seem to
beWhen does MFCA work? Are we, as academics, to assume that
thebenet associated with MFCA implementation will be
equivalentacross all sectors and in organisations of all sizes? Or
is thissomething that needs to be empirically examined? Who is
usingMFCA in different sectors and, more to the point,why are they
usingit? What are the key drivers of MFCA implementation? What
arethe barriers to MFCA adoption? Are they actual or perceived?
Arebarriers to MFCA adoption the same across different
organisations?How well do the realised benets associated with MFCA
adoptionreect the benets that were expected? These are just a few
of thequestions that extant evidence does not answer (see Table 1).
Whilenormative claims suggest MFCA is useful in all organisations,
theyare just that, normative, and without a body of evidence to
support
K.L. Christ, R.L. Burritt / Journal of8these claims there is
ample reason to doubt their validity. Answers
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005to these questions
will be required if MFCA is to be successfullypromoted and diffused
to a larger population.
It has also been observed, especially in Germany, there are
noworganisations that had once engaged with the ow cost
accountingagenda that no longer do so (Schaltegger et al., 2011;
Schmidt andNakajima, 2013). It would be of interest to investigate
one or moreof these organisations and nd out why this decision to
withdrawwas made. Was the information provided by MFCA not
useful?Were the costs involved in managing the system in excess of
thebenets that were received? Given state promotion of MFCA hasbeen
noted as among the main catalysts of MFCA adoption inGermany
(Schmidt and Nakajima, 2013), can it be that the reasonfor initial
adoption was in fact institutional pressure as opposed tothe belief
that the system would full a valid organisational need?
It might also be interesting within this context to examine
theorganisational functions in which MFCA is used and likely to
pro-vide the greatest benet. Burritt et al. (2002), for example,
suggestdifferent functions and their managers rely on different
types ofenvironmental accounting information. Furthermore, Kokubu
andTachikawa (2013) suggest the successful implementation of MFCAis
reliant on expertise being provided by multiple
departmentsincluding: accounting, operations, environmental,
engineering, andquality control. Thus it would be interesting to
investigate who, inorganisations where MFCA is implemented,
actually uses the in-formation provided and who is involved with
its preparation. Itmay then be that efforts to promote MFCAwould be
more effectiveif targeted towards individual managers engaged in
particularfunctions.
Drawing on the literature analysed for this review,
themanufacturing focus which dominates extant research also
pre-sents an area of potential concern. It has sometimes been
suggestedthat MFCA is likely to be more useful in traditional
manufacturingsettings (IFAC, 2005), and in organisations where
material ows arecomplex and potential costs high (Lang et al.,
2005; Loew, 2003).Nonetheless, we are also led to believe that MFCA
can provideuseful information to organisations operating in all
sectors;including both the service and not-for-prots sectors (ISO,
2011;Jasch, 2009; Papaspyropoulos et al., 2012). The above said
there islittle empirical evidence available to support this
claimwith regardto either sector. It may be that MFCA is useful in
these sectors, but itmay also be that service and not-for-prot
organisations eachrequire different or slightly modied tools. Thus
there is a need toextend the current focus of MFCA research beyond
manufacturingoperations in order to examine this potential. Such
research maylead to industry-specic guidance for MFCA being
developed. Or,alternatively, it may support the development of new
tools that aredeemed more appropriate for use within these
organisations. Po-tential sectors which may be of interest include:
service organisa-tions, not-for-prot concerns, primary production,
mining andresources, and utilities. In addition, research methods
that may beable to provide further insight in this area include:
comparativecase studies, interviews and survey-based research in
which sta-tistical analysis is employed.
A further avenue for future investigation would be to
considerand compare the usefulness of MFCA as an ad-hoc tool versus
onethat involves the routine generation of information. As
discussed inSection 2, MFCA is generally viewed as falling under
the umbrellaterm environmental cost accounting (Papaspyropoulos et
al.,2012). Burritt et al. (2002) suggest this implies the
informationprovided should be routinely generated in the manner
expected ofmost costing systems (Herzig et al., 2012). However,
there is somesuggestion that MFCA can still provide valuable
information whenused on an ad-hoc basis; that is as a tool that is
used either for thepurpose of a one-off decision or from time to
time in an irregular
aner Production xxx (2014) 1e12manner that incorporates no set
plans for future engagement or
cost accounting: a review and agenda for future research,
Journal of
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Table 1Possible directions for future research.
Proposed futureresearch questions
Possible associatedfuture sub-researchquestions
Possible method(s)
When does MFCAwork?
What are the costsand benets ofapplying MFCA to (i)not-for-prot,
(ii)service and (iii) SMEorganisations?
What issues arisewhen applying MFCAacross different in-dustry
sectors?
How does nationalculture affect theimplementation
andeffectiveness ofMFCA inorganisations?
Case studies;comparative casestudy; survey basedstatistical
research;interviews.
How widespread isMFCA adoption inpractice?
What is the currentstate of knowledgeconcerning MFCA
inorganisations acrossdifferent settings(e.g. industries,countries
etc)?
What are the keyfactors or driversassociated
withMFCAimplementation?
What are the barriersto MFCA adoption?
Survey based statisticaland qualitativeresearch.
Why do organisationschoose toincorporate MFCAinto their
activities?
What do organisa-tions see as theanticipated benetsassociated
withMFCA activities?
To what extent doinstitutional pres-sures inuence thedecision to
experi-ment with MFCA?
Case studies; surveybased statisticalresearch; interviews.
Why do organisationschoose to abandonMFCA activities?
What were the pri-mary factors thatencouraged earlyadopters to
engagewith MFCA? (E.g.were they strategi-cally oriented
orinstitutionallydriven).
To what extent didthe early adopters ofMFCA experiencebenet in
the me-dium and long term?
Case studies;interviews.
To what extent do thebenets associatedwith MFCA, aspresented in
thenormative literature,manifest whenapplied to actualpractice?
Under what condi-tions will MFCAresult in tangibleeconomic and
envi-ronmentalimprovements?
Case studies; surveybased statisticalresearch; interviews.
Which functions areinvolved with MFCAin actualorganisations?
Which functions areinvolved in preparingthe data for MFCA?
How is MFCA dataused by managerswithin differentdepartments?
How is MFCA infor-mation communi-cated betweendifferent
organisa-tional departments?
Case studies; surveybased statisticalresearch; interviews.
K.L. Christ, R.L. Burritt / Journal of Clea
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005adoption. For
example, Lang et al. (2005) posit that the use of owcost accounting
as an isolated analysis will still provide useful in-formation on
cost savings and environmental improvement po-tentials. When used
in this way the authors suggest that theprocess does not need too
much effort (Lang et al., 2005, p. 147).However, when MFCA is used
for the purpose for which it wasdesigned, as an addendum to the
existing cost accounting system,Lang et al. (2005, p. 147e8)
suggest the process becomes muchmore difcult requiring a lot of
effort and know how.
Many of the case studies that investigate MFCA as discussed
inSection 6 are arguably based on a single cost assessment that
isused to identify opportunities for both economic and
environ-mental improvement (Jasch, 2006). This information is then
usedfor benchmarking purposes and to initiate changes that
improveboth material and energy efciency (Schaltegger et al.,
2012). Thusit may be that the value of MFCA will be realised, not
as a routinetool, but as an ad-hoc process for assessing efciency
and costsavings potentials (Lang-Koetz et al., 2006). This could be
under-taken on an annual or bi-annual basis or whenever it was
deemednecessary by management (i.e. when considering investment
innew plant or developing new products). While it can be argued
thiswould impair the controlling function associated with MFCA
(Lang-Koetz et al., 2006; Schaltegger et al., 2002), a number of
benetswould remain intact. This approach may also be useful
whenapplied to the supply chain as it would remove the need for
theongoing coordination of information between
organisations(Weigand and Elsas, 2013). In order to understand this
potential itwould be useful to conduct comparative, longitudinal
casework inwhich both approaches are considered.
Finally, it may be useful to consider cross-national differences
inMFCA application. Although limited, the survey-based research
Table 1 (continued )
Proposed futureresearch questions
Possible associatedfuture sub-researchquestions
Possible method(s)
To what extent does theway in which MFCAdata is collected
andused relate toorganisationaloutcomes?
How can MFCA data(which is primarilypast oriented) beused to
supportfuture orienteddecisions?
Under what condi-tions will the use ofMFCA on an ad-hocbasis be
effective?
Case studies;comparative casestudy; interviews.
ner Production xxx (2014) 1e12 9reported in Section 6 suggests
there may be differences in MFCAknowledge and adoption across
cultures (Burritt and Tingey-Holyoak, 2012; Kokubu and Nashioka,
2005; Schaltegger et al.,2011), although it can be argued
cross-national studies are largelyabsent within existing
literature. Given that the development ofMFCA has been inuenced by
two distinct and disparate cultures inboth Germany and Japan (IFAC,
2005), as discussed in Section 4, itmay be that one size does not
in fact t organisations operating inevery country. For example,
Section 6 discusses the application ofMFCA in supply chains as
being potentially hindered by problemswith the collection of data
and condentiality (Weigand and Elsas,2013). It is possible this may
be more problematic in certain cul-tures (Deegan, 2007). Thus
existing guidelines may need to beamended via the inclusion of
appendices targeted towards partic-ular cultures and countries.
However, at this time such argumentsare only speculative and
additional research is required to ascertainwhether such action
would help or hinder the further adoption ofMFCA activities by
companies.
cost accounting: a review and agenda for future research,
Journal of
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Cle7.2. Recommendations for future research
As can be seen from the preceding discussion, there are
manyareas in which the MFCA literature needs to be developed
andmany questions that still need to be addressed. In order to do
this,there are two primary recommendations that can be made
bydrawing on the literature presented in Section 6.
First, it is evident that to the present time the research
methodsused to investigate MFCA in practice have been extremely
limited.While the focus on action-based case work is no doubt
important, itoverlooks the vast array of methodological approaches
and toolsthat are available to the contemporary researcher. In
summary,survey-based research is scarce, interview based research
non-existent, and the use of statistical analysis beyond basic
percent-age counts of relatively small samples virtually absent. As
may beexpected, the current one dimensional mindset severely limits
thegeneralizability of research ndings and may have contributed
tothe rut in which the MFCA literature now nds itself.
Neuman (2006) argues that different research methods, as wellas
qualitative and quantitative research designs, should not beviewed
as being in competition with each other but rather asdifferent
tools that complement each other. By observing MFCAfrom different
research perspectives it is likely that a more accuratepicture of
current development will be able to be ascertained; thismay include
the identication of barriers and enablers to imple-mentation
(Neuman, 2006). Survey-based statistical research inparticular may
allow for more generalized ndings as well as rec-ommendations for
the use and promotion of MFCAwithin differentsettings. Thus, it is
the recommendation of the authors that re-searchers in this eld
consider alternate research methods andresearch processes to
complement existing approaches as this willultimately result in a
more diverse and complete understanding ofMFCA as a topic.
Second, thus far theoretically informed research is virtually
non-existent within the MFCA literature. Indeed, the authors could
notlocate one theoretically informed study in which MFCA was
theprimary focus. This situation is not unique to MFCA as
theoreticalstudies are scarce across the entire EMA discipline
(Burritt, 2005;Jalaludin et al., 2011) which raises the question
for futureresearch of why this might be so. Parker (2005, p. 849),
in discus-sing the state of environmental accounting research,
notes thattheory and practice are interrelated and arguably have
the po-tential to be mutually contributing, whereas in contrast
Thomas(1997) argues that theoretical perspectives can constrain
ratherthan enlighten further enquiry.
There are several reasons why development of a
theoreticalfoundation for MFCA might be of use in this applied
science. Givenits role in providing structure and a way to organise
knowledge,theory can assist in answering many of the questions
identiedwithin this literature review. For example, it has been
suggested alogical progression at this point in the development of
MFCA as amanagement tool is to understand when MFCA works. Drawing
onextant management and environmental accounting
knowledgecontingency theory may provide a foundation by which the
cir-cumstances under which MFCA is used and found to
enhanceeconomic and environmental performance will be able to
beidentied (Bouma and van der Veen, 2002; Christ and Burritt,
2013;Qian et al., 2011). Research drawing on diffusion of
innovation canthen be used to understand howMFCA can be promoted to
differentorganisations and business segments (Rogers, 2003).
Diffusion ofinnovation can also be used to identify potential
barriers to MFCAadoption as well as variables that may facilitate
the implementa-tion process. Theory can then be used to answer why
organisationsare or are not using MFCA. Potential frameworks that
might be
K.L. Christ, R.L. Burritt / Journal of10useful in this regard
include new institutional sociology (Bouma
Please cite this article in press as: Christ, K.L., Burritt,
R.L., Material owCleaner Production (2014),
http://dx.doi.org/10.1016/j.jclepro.2014.09.005and van der Veen,
2002; Qian and Burritt, 2008), legitimacy the-ory and stakeholder
theory (Deegan, 2007). While this list is notexhaustive and there
are other theoretical approaches and para-digms that may be able to
contribute to the further development ofthis eld, it does offer a
starting point based on established researchon related topics.
The information presented in this reviewwould seem to
suggestthere is much that is not known about MFCA in practice. Yet
inwhatcould be described as an interesting development, there has
alsobeen increased work in recent years seeking to develop the
toolbeyond its original purpose i.e. to incorporate a life cycle
perspec-tive (for example, see: Jindrichovska and Purcarea, 2011;
Nakanoand Hirao, 2011; Schrack and Prammer, 2013). Nonetheless it
canbe argued these efforts may be premature. While it is important,
asnoted in Section 6, to further the current understanding of
howMFCA information interacts with other EMA tools and
informationsystems (Lang-Koetz et al., 2006; Strobel and Redmann,
2002), thisdoes not mean it is necessary to reinvent the wheel;
especiallywhen our understanding of MFCA in its original form is so
limited,due in part to the narrow and underdeveloped nature of
extantempirical evidence in this eld. Thus it is the authors'
belief that itis now necessary to consolidate what is already known
about MFCAand what needs to be known before seeking to develop the
toolfurther.
As it is, the recent release of ISO 14051 may represent a
game-changing event in the MFCA eld. Observation of how (or
indeedif) this event alters perceptions and the overall take-up of
MFCA bybusiness in both the short and long-terms is likely to
become a focalpoint. The following section will now conclude the
paper.
8. Conclusion
MFCA is a relatively new tool designed to support decisions
thatwill lead to improved economic and environmental performancevia
the explicit recognition of material and energy ows withinbusiness
operations, as well as a greater understanding of howthese ows
relate to different areas of business expense. The po-tential
importance of MFCA as a business tool has recently beenrecognised
with the release of ISO 14051: Material Flow Cost Ac-counting.
Given this development it was suggested that the futurewill see
increased interest given to MFCA by both academics andorganisations
from around the world. Thus, this article takes stockof what is
currently known about MFCA, and what needs to beknown, in order to
ensure promotional and research efforts aredirected towards the
areas where they will make the greatestdifference.
The review covered several areas. These include: a basic
over-view of what MFCA is in the context of more generic EMA
knowl-edge and development; the development of MFCA as amanagement
tool; the MFCA process; and a review and synthesis ofempirical
evidence concerning MFCA in practice. Finally, sugges-tions for a
research agenda for the futurewere derived based on thecurrent
state of play of evidence about the usefulness of the MFCAtool.
While every effort has been made within this review to providea
comprehensive and balanced synthesis of available MFCA litera-ture,
the observations made herein should be viewed in light ofseveral
limitations. As noted in Section 4, MFCA was originallydeveloped in
Germany and Japan. As a result much of the earlywork to emanate
from these countries was designed for use bydomestic organisations.
Thus it is acknowledged there are publi-cations, especially from
the late 1990s and early 2000s, that areonly available in German or
Japanese. These papers were notconsidered within this composition
which, as noted in Section 6,
aner Production xxx (2014) 1e12was limited to publications
available in English. While it is not
cost accounting: a review and agenda for future research,
Journal of
-
f Cleabelieved the decision to exclude these papers would be
sufcient toundermine the value of this review, it is possible some
of the areasdiscussed, and some of the research questions that are
proposed,may have been covered elsewhere.
The extant literature that was analysed within this
reviewrevealed a sub-discipline of EMA that has been largely driven
bynormative arguments and attempts to appeal to common sense.The
review nds empirical evidence concerning MFCA in practice
isunderdeveloped and existing knowledge has been curtailed bywhat
could almost be described as a one-dimensional mindset onthe part
of MFCA researchers. It was not the purpose of this reviewto either
discourage action-based research or to impugn its value,however
there would seem to be an unwillingness by researchersto move
beyond action-based case studies in the further develop-ment of
this eld. In addition, there is a noticeable lack of theo-retical
explanations for MFCA development and implementation.
MFCA research to date has made substantial inroads to
justi-fying additional investment in the development of MFCA as
aneconomic and environmental management tool. Indeed, there
arenumerous case studies in which the value of MFCA to
businessorganisations has been empirically supported. Nonetheless,
itwould appear the time has come to complement and enhanceexisting
knowledge with new perspectives and approaches. Thisundertaking
should include, not only new research methods andtheories, but also
asking different types of research questions asdeveloped in the
paper.
Acknowledgements
The authors would like to thank participants at a workshop
onMaterial Flow Cost Accounting held at the School of
Commerce,University of South Australia, for their very useful
comments. Inaddition, the authors are grateful to three anonymous
reviewers fortheir constructive feedback which greatly improved the
quality ofthe paper.
Abbreviations
EMA Environmental Management AccountingEPI Environmental
Performance IndicatorsERP Enterprise Resource PlanningHFMT Hunting
Federation of Macedonia and ThraceIFAC International Federation of
AccountantsIMU Institut fr Management und Umwelt (Institute of
Management and the Environment (Germany))ISO International
Organization for StandardizationJISC Japanese Industrial Standards
CommitteeKPI Key Performance IndicatorLCA Life Cycle AssessmentMETI
Ministry of Economy, Trade and Industry (Japan)MFA Material Flow
AnalysisMFCA Material Flow Cost AccountingPDCA Plan, Do, Check, Act
(from ISO 14051)SME Small and Medium-sized EnterprisesUSD United
States Dollars
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