The lessons learned from the Hope Brewery case study provide evidence on the potential benefit that could be derived from implementing of MFCA as a decision framework to support waste-reduction decisions. Although, there is no previous brewery process waste related cost to which it can be compared, it nevertheless have shown that it is essential that brewery managers need to be conversant with related waste costs in order to seek opportunities for its reduction. Not knowing the cost of waste generated in a production process could lead to waste-reduction decisions that are unsound and inappropriate. The case study served to sensitise awareness in the manager of Hope Brewery on the need to capture waste information since within the six months period of the case study. The analysis of process waste-information generated assisted the brewery manager to reflect on previous years losses. The availability of process waste information through MFCA calculations during the case study brought a few changes to the existing process waste practices in Hope Brewery.
The following are some of the changes to Hope Brewery’s process after the case study:
• The old wort pan and some of the conducting pipes were replaced to reduce the volume of water leaks;
• Records of material input and beer output are recorded using a simple system of documentation. Wages of the handymen have been aligned to production hours rather than a fixed amount, thereby resulting in cost savings; and
• Although water is available from a spring nearby and a borehole during the winter period, water usage in production and housekeeping has been reduced considerably.
The lesson learned from the interview at SAB Ltd provides evidence that despite the rigour of its MASs; the organisation lacks the ability to generate accurate waste data. The use of variable costs by SAB Ltd to value waste makes the MAS inadequate to provide the necessary waste information to support and improve sound waste- reduction decisions. The calculation of process waste costs using the input-output
analysis method is in itself deficient and misleading since it concentrates only on physical units in processes. It became obvious that a more appropriate, waste specific MAS like the proposed adjusted MFCA is required to generate adequate and appropriate process waste information both in quantity and costs to support and improve its waste-reduction decisions.
8.6.1 Suggestions for a change to Management Accounting for waste costs
The study found that top management and line managers were usually provided with condensed waste-cost information after a week at SAB Ltd, while Hope Brewery had no available waste record. To overcome the problem in Hope Brewery, a case study was conducted that indicated that in order to make sound waste-reduction decisions, process waste cost information need to be adequately captured. The large volume of waste generated on a daily basis at SAB Ltd indicates that an appropriate waste specific accounting framework such as an adjusted MFCA is required to capture process waste cost information for sound waste-reduction decisions to be made. Although, adopting MFCA into the existing MASs might seem difficult to achieve, brewery managers might find that once the mechanism is set up, it could provide adequate and much needed process waste cost information to support and improve brewery process waste-reduction decisions.
This study therefore suggests that:
• SAB Ltd should structure its MASs by linking all organisation resources used in the production process in terms of monetary value and physical volume to an adjusted MFCA process to generate adequate waste cost information; • SAB Ltd should introduce a MAS that does not only include variable costs in
its process waste-cost calculations, but should capture all costs related to generating the process waste; and
• Hope Brewery should, in the least, introduce a simple management accounting system to record the flow of materials and energy and other waste-related information during production processes so as to enable the manager to identify points of waste generation in the process, which can be monitored to improve waste-reduction decisions.
These suggestions do not necessitate a drastic change to existing MASs, however it suggests a small adjustment to accommodate all waste related costs not captured in the existing process waste information. Essentially, such adjustment to the existing MASs will provide opportunities to initiate corrective actions since process waste- generating sources are being monitored. The introduction of MFCA needs not be initiated as a once-off project, however, a gradual and fairly low-cost change, which could lead to significant improvement in the provision of process waste-cost information for sound waste-reduction decisions, is suggested. Furthermore, these suggestions are intended as an improvement to the existing MASs to capture waste- cost information for increased environmental responsibility of the organisation. Adapting MFCA and incorporating it into the existing MASs may assist managers to reduce production costs as well as increase profitability, which is the goal of the organisation.
Moreover, timing of process waste-cost information on a process-by-process basis, and according to an independent process waste category, may be vital to successfully benefit from these suggestions. Consequently, managers need to be informed about important changes to existing MASs and to educate all Management Accounting personnel on significant implications of such changes.