Application of material flow cost accounting (MFCA) in waste reduction: a case study on small and medium-scaled enterprise (SME) corrugation packages industry

Abstract

Nowadays, due to inadequate resource utilization and a lack of comprehensive accounting procedures, many firms face substantial issues in controlling their environmental and cost-related implications. As the global emphasis on sustainability and resource efficiency grows, there is an increasing need for Material Flow Cost Accounting (MFCA) adoption to meet these concerns. In this case study, a small and medium-scaled enterprise (SME) i.e., Corrugation Packages Industry in Pakistan has been selected. The formation of a corrugation box has been considered to evaluate the process waste based on MFCA analysis. The identified areas with high negative costs and their reasons are also elaborated with proposed MFCA-based solutions. The positive and negative costs of entire process have been further examined by material cost (MC), system cost (SC), energy cost (EC), and waste management cost (WC). By successful implementation of the MFCA, it has been found that an improvement in the total cost of about 11.11% (MC), 29.61% (SC), 9.32% (EC), 92.57% (WC) have been obtained, whereas the enhancement in positive costs of about 9.82% (MC), 31.31% (SC), 9.88% (EC), 95.08% (WC) have been recorded, and reduction in negative costs of about 29.50% (MC), 36.56% (SC), 35.52% (EC), and 69.83% (WC) have been noted.