Proceedings of ICLT 2014
THE USE OF MATERIAL FLOW COST ACCOUNTING TECHNIQUE TO REDUCE LOSSES WITHIN THE WOODEN FURNITURE PRODUCTION PROCESS
Phuriwat Chanruechai; Rungchat Chompu-inwai
Department of Industrial Engineering, Faculty of Engineering, Chiang Mai University, Chiang Mai, Thailand; Department of Industrial Engineering, Faculty of Engineering, Chiang Mai University, Chiang Mai, Thailand
International Conference on Logistics & Transport 2014, Kuala Lumpur, Malaysia, pp. 232-239
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Abstract
This study looked at how to reduce production losses using Material Flow Cost Accounting (MFCA), an environmental impact assessment technique used to help enhance productivity, and improve environmental management. MFCA focuses on both the costs of products and the costs associated with materials losses, and its ultimate purpose is to identify opportunities for reducing materials usage and losses, improve the efficiency of materials and energy usage, and reduce adverse environmental impacts. The research was carried out at a furniture factory in the north of Thailand, where problems such as high costs and residual wood waste have been experienced in recent years. Therefore, this research study aimed to analyse, classify and identify the losses incurred during the case study company’s production process, and then develop and propose guidelines for improvement. The MFCA concept was employed to analyse resource use inefficiencies within the production process, as well as the causes of these inefficiencies. An estimate of the losses incurred in terms of costs was produced using the MFCA. Material loss data in terms of material costs, system costs, energy costs, and waste management costs obtained during the MFCA analysis were then summarized and prioritized using Pareto diagram. The results of the analysis helped identify ways to improve the design of the process and the product. Suggested solutions were developed and then put into practice, with the amount of wood and chemicals used during the process reduced as a result. Moreover, the standard working procedures used during each process step were redesigned. The results showed that MFCA helped total input costs for the production of the night table decrease by 19.55%, with negative product costs falling from 38.54% of input costs to 27.2% of input costs. In summary, this case study found ways to adapt the wooden furniture production process in the study factory, so as to reduce both losses and the adverse environmenta
Keywords
Wooden Furniture; Material Flow Cost Accounting
Citation
Phuriwat Chanruechai; Rungchat Chompu-inwai (2014). THE USE OF MATERIAL FLOW COST ACCOUNTING TECHNIQUE TO REDUCE LOSSES WITHIN THE WOODEN FURNITURE PRODUCTION PROCESS. Proceedings of the International Conference on Logistics & Transport (ICLT 2014), Kuala Lumpur, Malaysia, pp. 232-239.