Decision making on manufacturing system from the perspective of material flow cost accounting

Recently, significant research interest has been focused on environmental management aimed at the sustainable development of enterprises and society while decreasing the impact of such development on the environment. Japanese companies have been developing a variety of approaches and strategies. Material flow cost accounting (MFCA) has been proposed as a generally applicable indicator of growth potential and corporate environmental impact. Many companies that have introduced MFCA could recognize previously unnoticed losses. In addition, MFCA is useful as a tool to evaluate environmental impact and draft improved, more cost-efficient manufacturing plans. This paper demonstrates that companies that introduce MFCA can improve decision-making procedures and advantageously alter their manufacturing methods in a manner that differs from the inventory reduction idea based on the traditional Toyota production system.