How do you evaluate and benchmark material handling performance and costs in MFCA?

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Material flow cost accounting (MFCA) is a method of measuring and improving the environmental and economic performance of material handling processes. It helps you identify and reduce the costs of waste, inefficiencies, and emissions in your material handling system. In this article, you will learn how to evaluate and benchmark your material handling performance and costs using MFCA.

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Azad jain

Enhance cost efficiency and quality in Supply Chain Management & Indirect Procurement through strategic sourcing and…
David T. Kade

Warehousing and Industrial Automation Consultant | Boston College

1 What is MFCA?

MFCA is based on the idea that materials have both physical and monetary flows in a production system. Physical flows are the actual movements and transformations of materials, such as raw materials, intermediate products, final products, and waste. Monetary flows are the costs associated with these physical flows, such as material purchase, processing, transport, storage, and disposal. MFCA tracks both physical and monetary flows and assigns costs to material inputs, outputs, and losses.

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Azad jain

Enhance cost efficiency and quality in Supply Chain Management & Indirect Procurement through strategic sourcing and strong supplier relationships, focusing on innovation and sustainability to align with business goals.
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To assess material handling performance and costs in Material Flow Cost Accounting (MFCA), first identify key metrics such as task time and cost per unit. Next, collect and analyze data on handling processes, comparing it with industry standards to set benchmarks. Finally, implement improvements, monitor progress, and continuously update benchmarks to drive ongoing optimization.

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2 Why use MFCA?

MFCA can help you improve your material handling performance and costs in several ways. First, it can help you identify the sources and causes of material losses and inefficiencies in your system, such as overproduction, defects, scrap, rework, waiting, and inventory. Second, it can help you quantify the environmental and economic impacts of these losses and inefficiencies, such as energy consumption, greenhouse gas emissions, waste disposal fees, and lost revenue. Third, it can help you prioritize and implement improvement measures to reduce or eliminate these losses and inefficiencies, such as process optimization, waste prevention, recycling, and reuse.

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David T. Kade

Warehousing and Industrial Automation Consultant | Boston College
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High Quality on the Jungheinrich products, US built electric trucks have low production capabilities, LP’s are below par and the dealer network is patchy at best. Electric trucks can’t complete with Raymond or Crown in large applications on Product offering, flexibility, service or telemetrics. Save the headache, I vote Raymond and Crown in Electric and Doosan, Toyota or Hyster-Yale in LP.

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3 How to implement MFCA?

MFCA can be implemented in four main steps: defining the system boundary, collecting data, analyzing data, and reporting results. The system boundary defines the scope and level of detail of the MFCA analysis, such as the product, process, or facility to be examined. The data collection involves gathering information on the physical and monetary flows of materials within the system boundary, such as material quantities, qualities, prices, and costs. The data analysis involves calculating the material balance, the material flow cost, and the key performance indicators (KPIs) for the system. The material balance shows the input-output relationship of materials in the system. The material flow cost shows the total and unit costs of material inputs, outputs, and losses. The KPIs show the efficiency and effectiveness of material handling in the system, such as material productivity, material intensity, material loss rate, and material cost ratio. The reporting results involves presenting and communicating the MFCA findings and recommendations to the relevant stakeholders, such as managers, employees, customers, and regulators.

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4 How to benchmark MFCA?

Benchmarking is the process of comparing your performance and costs with those of other similar or best-in-class systems. It can help you identify gaps and opportunities for improvement in your material handling system. To benchmark your MFCA results, you need to select appropriate benchmarking criteria, sources, and methods. The benchmarking criteria are the aspects of performance and costs that you want to compare, such as the KPIs mentioned above. The benchmarking sources are the external or internal references that you want to compare with, such as industry averages, competitors, or historical data. The benchmarking methods are the techniques or tools that you want to use to compare, such as ratio analysis, trend analysis, or gap analysis.

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David T. Kade

Warehousing and Industrial Automation Consultant | Boston College
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Time studies and good old fashion power prover’s- the truth will be told. Have a third party like EnerSys or Deka come in and provide the customer and manufactures the answer, do the analysis. Time studies are easy, you want to make it natural use a real route and see all the Proformance capabilities as a system (not just lift/lower), but time all the trucks with the customer and same driver and you know the answer.

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5 How to improve MFCA?

Improving your MFCA results requires implementing actions that reduce or eliminate the material losses and inefficiencies in your system. These actions can be classified into three types: technical, organizational, and behavioral. Technical actions are those that involve changes in the equipment, technology, or design of the material handling system, such as upgrading, retrofitting, or redesigning. Organizational actions are those that involve changes in the policies, procedures, or structures of the material handling system, such as standardizing, streamlining, or integrating. Behavioral actions are those that involve changes in the attitudes, skills, or habits of the people involved in the material handling system, such as training, motivating, or rewarding.

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David T. Kade

Warehousing and Industrial Automation Consultant | Boston College
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Electric production in the US is embarrassing. QC on CAT/Mitsubishi LP’s. Work on Flexibility with engineering to meet US applications like drive-in and push-back rack.

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David T. Kade

Warehousing and Industrial Automation Consultant | Boston College
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Production Capability on electric side. Developing a National Account department that wants to complete with Toyota/ Raymond and Crown. Economy of scale - to keep up with Toyota/ Raymond, Kion etc. etc. You have three competing players 1) Mitsubishi Japan 2) Jungheinrich and Mitsubishi Logisnext in Houston- until they get on the same part product, production, parts, pricing and dealers will continue to be all over the map some great, some awful, really awful.

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How do you evaluate and benchmark material handling performance and costs in MFCA?

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1 What is MFCA?

2 Why use MFCA?

3 How to implement MFCA?

4 How to benchmark MFCA?

5 How to improve MFCA?

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