Using material flow cost accounting to optimize manufacturing process in thermal power (Case study in Quang Ninh thermal power plant)

s Million vnd 7,897 0.12 4,766 0.06 4,846 0.07 5 Lubricants Million vnd 6,632 0.10 5,636 0.08 5,072 0.07 356 No Contents Unit 2015 2016 2017 Cost (%) Cost (%) Cost (%) 6 FO oil (incineration + starter) Million vnd 114,767 1.72 93,332 1.27 131,721 1.93 7 DO oil Million vnd 104 0.00 12 0.00 108 0.00 8 Supplies for regular repairs Million vnd 37,409 0.56 97,699 1.33 86,178 1.26 II.2 Energy costs Million vnd 96,247 1.44 42,125 0.57 82,849 1.22 1 Industrial water Million vnd 2,697 0.04 2,975 0.04 2,722 0.04 2 Self-produced electricity for production (included technical electricity) Million vnd 93,550 1.40 39,150 0.53 80,127 1.18 II.3 Other expenses Million vnd 2,173,362 32.56 2,270,221 30.96 2,395,192 35.15 1 Salary costs Million vnd 162,739 2.44 222,040 3.03 230,410 3.38 2 Depreciation of fixed assets Million vnd 1,950,838 29.23 1,954,219 26.65 1,956,428 28.71 3 Other fixed costs Million vnd 59,785 0.90 93,962 1.28 208,354 3.06 II.4 Financial costs Million vnd 2,901 0.04 2,952 0.04 2,663 0.04 1 Waste treatment costs Million vnd 573 0.01 569 0.01 547 0.01 2 Responding to oil spills Million vnd 742 0.01 602 0.01 637 0.01 3 Garbage collection, waste treatment Million vnd - 360 0.00 - - 4 Environmental sanitation Fine Million vnd 342 0.01 274 0.00 310 0.00 5 Transportation of waste Million vnd 398 0.01 383 0.01 374 0.01 6 Insecticide Million vnd 846 0.01 764 0.01 795 0.01 (Source: research by the author) The application of MFCA at Quang Ninh TPP from 2015 to 2017 results in some figures on material and production costs as follow: - Costs of raw materials of the Company include: coal, FO oil, DO oil, limestone, chemicals, grinding machine and supplies for regular repairs. Cost of raw materials accounts for the largest proportion of the total cost (from 58% to 62%) according to MFCA method. 357 Among the cost of raw materials, the cost of coal accounts for 55% - 60% of the total cost, and the figure for fuel oil costs is 1.15% - 3.35%. - System costs include: labor costs, depreciation of fixed assets, interest expenses, other fixed costs, maintenance and transportation costs. These costs account for from 37% to 41%, of the total cost according to MFCA method. In order to save money on this system, it is necessary to take controls from the purchase of input assets in the construction stage of the company. - Energy costs in the Company such as electricity, water account for a small proportion of 0.5% - 1.3% of the total cost according to MFCA method. However, in number, the expenses represent relatively high cost. - Waste management cost: is the expense for "material wastage incurred in a volume center". Waste management includes management of emissions, sewage and solid waste. Waste management costs are the costs of carrying out activities within and outside the organization such as refurbishment of unsatisfactory products, recycling, waste tracking, storage, treatment or disposal. In Quang Ninh TPP, the cost of waste includes some main types such as oil spill responding costs, garbage collection, waste treatment, waste transportation, insecticide cost, ash removal costs or environmental sanitation costs. Annually, the waste costs represents a very small proportion of the total cost, only 0.04%. 3.4. Assessment waste in material flow analysis in Quang Ninh Thermal Power Plant In general, coal wastes are incurred in two principal stages: Coal mill and coal burning at Quang Ninh TPP. At Quang Ninh TPP, coal wastes are arised in coal burning. According to the survey, wastes are existed when coal is not burned fully in the boiler. The main causes are dued to the technology of bolier. The benchmarking unburned coal is 6-8% but it is difficult to achieve this rate. At Quang Ninh TPP, the real rate is 9 -15%. According to the Table 1, wastes have not calculated fully, especially wastes are incurred from unburned coal, coal price (the price is fixed by government), movement coal. 4. Discussions and Recommendations 4.1. Identification principal elements of MFCA in TPP (1) Principal material with lagre amount: Coal. (2) Quantity centre: In TPP, there are four quantity centres. They are: Raw coal bunker, Coal mill, Powdered coal bunker and Boiler. (3) Material balance : Coal input = Coal transferring + Coal loss. Material loss incurs in transportation coal and due to burning coal. (4) Cost calculation: Calculating all cost by MFCA. All cost items are allocated by coal loss rate of each quantity centre for final product (kwh electricity and waste). Waste management cost is wastes. (5) Material flow model: By graphic and shown by physical data. 358 4.2. Steps applied MFCA in TPP (1) Embedding management in process and identifying responsibilities: Assign some staff with knowledge and experience in their department (Board of Directors, Planning Department, Technical Department, Fuel Department, Boiler Department, Accounting Department, Environmental Supervisor). (2) The scope and boundary of the process and building the material flow model in the manufacturing: Raw coal bunker, Coal mill, Powdered coal bunker and Boiler (Figure 1). (3) Allocation costs based material flow cost accounting method divided to: Material costs, Energy costs, System costs and Waste management costs: Accountants allocate material cost for four quantity centres. (4) Interpretation and communication of MFCA results: Using some countable tables are the material matrix of quantity centre, the table of quantity centre’s of input-output material, the table of quantity centre’s material summary, the table of system cost, energy cost and wastes management cost, the table of MFCA summary. (5) Improvement production and minimizing material wastage through MFCA result: Identify wastes, material loss in detail each quantity centre. 5. Conclusions MFCA is a management tool to reduce waste in usage material and environmental impact. TPPs should apply MFCA to ensure the physical balance, calculate full wastes, electricity cost and material losses. Costs in producing process based MFCA are included material cost, energy cost, system cost and waste management cost and they are illustrated. Using the case study in Quang Ninh TPP, the paper summaries the stages and the manufacturing costs to quantify the impact of material flow. Some causes of wastes are identified to require some adjustments in management of material flow (coal). The scope within Quang Ninh TPP is not enough for all TPP in Vietnam. Overall, this study has implication the model of material flow in Vietnamese thermal power plants and usage MFCA to reduce wastes. First, the study identifies the stages of manufacturing process based the material flow. Second, this study summaries producing cost in four costs classified by MFCA to recognised full wastes and material losses. Third, some steps of application MFCA with principal elements are recommended for TPP. 6. Reference APO (2014). Manual on Material Flow Cost Accounting: ISO 14051. Tokyo, Asean Productivity Organization. Brunner, P. H. R., H (2005). Practical Handbook of Material Flow Analysis, Lewis Publishers. 359 Hargroves, K. J. S., M. H.Hargroves, K. J. & Smith, M. H. (2012). The Natural Advantage of Nations: Business Opportunities, Innovations and Governance in the 21st Century, CRC Press, London. OECD (2009). Eco-Innovation in Industry - Enabling green growth. Shen-Ho Chang, A.-A. C., Chin Ling Chu, Teng-Shih Wang, Sung-I Hsieh (2015). Material Flow Cost Accounting System for Decision Making: The Case of Taiwan SME in the Metal Processing Industry. Asian Journal of Finance & Accounting Vol. 7, No. 1 Trần Văn Lượng (2018). Giải pháp nào cho môi trường nhiệt điện than Việt Nam, dien-than-viet-nam.html