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Journal cover: Journal of Islamic Marketing

Journal of Islamic Marketing

ISSN: 1759-0833

Online from: 2010

Subject Area: Marketing

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Principles in halal supply chain management


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DOI (Permanent URL): 10.1108/17590831211259727

Article citation: Marco Tieman, Jack G.A.J. van der Vorst, Maznah Che Ghazali, (2012) "Principles in halal supply chain management", Journal of Islamic Marketing, Vol. 3 Iss: 3, pp.217 - 243


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The Authors

Marco Tieman, Faculty of Business Management, Universiti Tecknology MARA, Shah Alam, Malaysia

Jack G.A.J. van der Vorst, Logistics, Decision and Information Sciences, Wageningen University, Wageningen, The Netherlands

Maznah Che Ghazali, Faculty of Business Management, Universiti Tecknology MARA, Shah Alam, Malaysia

Acknowledgements

The authors would like to acknowledge the contribution of IHI Alliance in facilitating the large discussion group and focus group sessions. IHI Alliance and the participants have contributed significantly to this paper.

Abstract

Purpose – The purpose of this paper is to introduce a new framework to optimise the design of halal food supply chains, called the “Halal Supply Chain Model”. In this research the main logistics business processes are defined, which are the determinants for the halal supply chain performance.

Design/methodology/approach – Next to an extensive literature review, a large discussion group and various focus group sessions conducted in Malaysia, The Netherlands and China have been used to identify halal control activities and assurance activities in logistics business processes, with a focus on transportation, warehousing and terminal operations.

Findings – The findings show that product characteristics (bulk versus unitised, ambient versus cool chain) and market requirements (Muslim or non-Muslim country) determine the supply chain vulnerability to halal contamination, for which halal control activities and assurance activities are put in place to reduce supply chain vulnerability. More empirical research is needed to further refine the Halal Supply Chain Model for different product–market combinations. Second, qualitative research is recommended for halal cosmetics and pharmaceutical supply chains.

Practical implications – This study shows that halal supply chain management is different from conventional supply chain management, which requires a halal policy and specific design parameters for supply chain objectives, logistics control, supply chain network structure, supply chain business processes, supply chain resources and supply chain performance metrics.

Originality/value – The Halal Supply Chain Model can be an important instrument to design and manage halal food supply chains in extending halal integrity from source to point of consumer purchase. As there is an evident lack of academic research in the field of halal supply chain management, it provides an important reference for halal logistics and supply chain management. The large discussion group and focus group sessions resulted in the publication of the International Halal Logistics Standard (IHIAS 0100:2010) by IHI Alliance in 2010.

Article Type:

Research paper

Keyword(s):

Halal supply chain model; Halal supply chain management; Halal logistics; Supply chain management; Halal management system; Halal performance; Halal; Distribution management; Malaysia; The Netherlands; China.

Journal:

Journal of Islamic Marketing

Volume:

3

Number:

3

Year:

2012

pp:

217-243

Copyright ©

Emerald Group Publishing Limited

ISSN:

1759-0833

1 Introduction

A significant paradigm shift of modern marketing is that companies move away from a consumer-centric to a value-driven approach, which lifts the concept of marketing into the arena of human aspiration, values, and spirits (Kotler et al., 2010). Halal (permissible, lawful) is clearly based on values, namely Islamic values (Zakaria and Abdul-Talib, 2010). As argued by Lada et al. (2009), Alserhan (2010b), Ibrahim and Mokhtarudin (2010), Wilson and Liu (2010) and Tieman (2011), halal needs a supply chain approach, where the value chain and its supply chain should be fully aligned (Christopher, 1998; van Amstel and van Goor, 2001; van Assen et al., 2010) to fulfil the promise of halal to the end-consumer: that the food they consume is a true manifestation of Islamic principles (World Halal Forum, 2009). The integrity of halal food supply chains is becoming an increasing concern (Zailani et al., 2010; Lam and Alhashmi, 2008). There are a number of reasons why the halal industry is increasingly occupied with the integrity of halal food chains. First, halal integrity issues are more likely to occur than before, because of increasing complexity of supply chains (Lam and Alhashmi, 2008) and focus on cost reduction in the logistics industry (Wilson and Liu, 2010). Second, the complexity of today's supply chain is making integrity issues harder to detect (Zakaria, 2008; Shafie and Othman, 2004; Talib et al., 2008; Abdul et al., 2009). Third, the consequences of halal integrity issues in the supply chain have arguably become more costly than before for brand owners and retail chains to repair (Waarden and van Dalen, 2010; Zakaria and Abdul-Talib, 2010; New Straits Times, 2005).

Halal food supply chains are vulnerable due to their credence quality attributes (Bonne and Verbeke, 2008), importance of maintaining halal integrity throughout the supply chain (Tieman, 2011; Bahrudin et al., 2011), essence of avoiding doubt in halal food (Kamali, 2010), lack of control of halal food norms (Waarden and van Dalen, 2010; Berger, 2011; Pointing et al., 2008; Norman et al., 2009; Zakaria, 2008), and sensitivity of the Muslim consumer towards halal (Havinga, 2011, Wilson and Liu, 2010). These vulnerabilities make halal supply chains complex to design and manage. These vulnerabilities cannot be reduced through conventional supply chain models. Conventional models recognise the importance of efficiency, but are inadequate for considering other aspects such as ethics, sustainability and human values (Milestad et al., 2010) that are critical for halal supply chains.

The vulnerability of halal food supply chains, the large size and growth of the halal market (Alam and Sayuti, 2011; Solsis, 2010) and more stringent requirements in halal standards, forces brand owners to extend halal towards supply chain management (SCM). Important questions halal certified food manufacturers have today are whether and how to start with halal SCM in protecting the integrity for the Muslim consumer and protecting their brand. Food manufacturers need a reference on how to design and manage halal food supply chains in order to provide credibility and trust to the Muslim consumer.

This paper defines the principles in the design and management of halal food supply chains. It introduces the halal supply chain model as a framework to design and manage halal food supply chains. This framework is based on a large discussion group and focus groups and serves to provide the halal industry with practical guidance on the functional requirements and design parameters (Schnetzler et al., 2007) for halal food supply chains. Next section will discuss the literature review and research framework. Section 3 will share the research methodology in greater detail. Section 4 presents the results of the large discussion group and focus groups. Section 5 covers the concluding section, which is followed by a section on the suggestions for further research.

2 Literature review and research framework

Allah has revealed the code of law for the Islamic way of life and commanded people to follow, also knows as Shariah (Islamic law) (Hussaini, 1993; Doi, 1984). The consumption of halal (lawful) and toyyib (wholesome); and abstaining from haram (unlawful) are essential according to Shariah in protecting Islamic faith, life, dignity or lineage, intellect and property (IHI Alliance, 2009; Laldin, 2006). The grounds of haram in food according to Kamali (2010) are:

  • manifest of harm;
  • intoxication (alcohol and narcotics);
  • filth, impurity and natural revulsion (such as carrion, spilt blood, pig meat); and
  • unlawful acquisition.

However, according to the author there are grey areas (matters that fall between halal and haram), which is due to the sources evidence of the Shariah is not free from doubt or its application to a particular subject or case uncertain. In these cases the Islamic school of thought, local fatwas (religious rulings) and local customs play a key role in judging if it is to be avoided or recommended. Therefore, an important function of halal SCM is to ensure that a halal product does not move into the grey area or haram state.

Riaz and Chaundry (2004), Bonne and Verbeke (2008), Abdul et al. (2009), Muhammad et al. (2009) and Department of Standards Malaysia (2010a, b, c), apply a hazard analysis and critical control points (HACCP) approach to halal food supply chains. HACCP is a systematic way of analysis the potential hazards in a food supply chain, identifying the critical control points in the supply chain where the hazards may occur and deciding which are critical to food safety (Mitchell, 1992). According to Pun and Bhairo-Beekhoo (2008) key factors affecting HACCP practices are: food regulations; role of the industry; government policies and interventions; training on food safety and hygiene; and food contamination and/or poisoning. Fotopoulos et al. (2011) shows that knowledge, skills and staff commitment are critical for an effective implementation of HACCP. Similar to a food safety management system with its food safety control activities and assurance activities (Lunging et al., 2008), a halal management system is needed with its halal control activities and assurance activities in logistics business processes.

Halal SCM can be defined as the management of a halal network with the objective to extend the halal integrity from source to the point of consumer purchase. In order to ensure that the product is truly halal at the point of consumer purchase it is critical to define what are principles in the management of halal supply chains. Tieman (2011) argues that the foundation of halal SCM is determined by three factors, namely: direct contact with haram (prohibited), risk of contamination and perception of the Muslim consumer. In his model, risk is based on the product characteristics, such as dry versus wet products and bulk versus unitised products. Perception is based on the market requirements, such as Islamic school of thought, local fatwas and local customs.

The halal supply chain model should be adapted from existing (food) supply chain models that most closely facilitate the Islamic values of halal supply chains. Existing SCM models like the management paradigm (de Leeuw, 1988), Integral customer service concept (van Goor, 1991), SCM framework (Cooper et al., 1997), supply chain operations reference-model (Supply Chain Council, 2011), integral demand and supply chain model (van Amstel and van Goor, 2001) and the framework for chain/network development for food supply chains (van der Vorst and Beulens, 2002) provide many common components as shown in Table I.

Although the above models do not contradict Shariah (Islamic law), important aspects of halal in the design and performance measurement of halal supply chains are not addressed in these models. The core of the supply chain model is amended from the framework for chain/network development for food supply chain networks, which was developed by van der Vorst and Beulens (2002), based on Cooper's SCM framework (Cooper et al., 1997). This model provides a sound basis, which has been further amended for the halal supply chain model. The proposed halal supply chain model is shown in Figure 1.

Halal policy and supply chain objectives

By developing a halal supply chain model, this model should first of all ensure the right intention (Alserhan, 2010a). Therefore, halal needs commitment at top management level through a halal policy (Department of Standards Malaysia, 2010a, b), which acts as basis for the organisation of the supply chain. Amongst others, a halal policy addresses: the responsibility of an organisation in protecting the halal integrity along the supply chain; scope of halal certification of the organisation; the assurance to the consumer or customer (the promise); and method of assurance (control mechanism; covering aspects like halal committee, halal compliance officer and inspections). In line with the integral demand and supply chain model (van Amstel and van Goor, 2001) and the framework for chain/network development for food supply chains (van der Vorst and Beulens, 2002), supply chain objectives (logistics and customer service objectives) are being formulated that direct the design parameters (Schnetzler et al., 2007) of halal food supply chains.

Logistics control

Logistics control is the heartbeat of the halal supply chain model, which provides the foundation for effective decision-making and management of a supply chain (van Damme, 2000). van Amstel (2002) defines logistics control as the organisation, the planning and control of goods flows, from the development, the purchasing, via manufacturing and distribution to the end-customer with the aim to satisfy the needs of customers at low cost and with controlled use of capital. Amongst others, important elements in logistics control are (van der Vorst, 2000): hierarchy in decision levels (Hofmann, 2010), type of decision-making (Manuj and Sahin, 2011), positions of the customer order decoupling point (CODP) (Olhager, 2010; Sun et al., 2008) and level of coordination (Naspetti et al., 2011). According to Seuring (2009) and Peterson (2002) an integrated supply chain can only be optimised when the chain participants function together to improve the overall supply chain. This requires coordination. Aken (1994) distinguishes four coordination forms, based on leverage (power, influence) and impact (direct, indirect). Resulting in four quadrants:

  1. regulating coordination (indirect impact and power);
  2. conditional coordination (indirect impact and influence);
  3. conducting coordination (direct impact and power); and
  4. inducing coordination (direct impact and influence).

Coordination according to Aken's (1994) classification of coordination, halal supply chains could best be classified as “regulatory coordination” (indirect impact and power) as halal and halal logistics comes with standards. However, with cross border supply chains, there are various halal standards involved. This power is indirect through standardising tasks and procedures to ensure coordination and standardisation of output (van Amstel, 2002). For halal supply chains it is important that supply chains are aligned to the requirements of the destination market. This minimum requirement, as logistics design parameter, should be shared throughout the supply chain.

On the management of supply chain partners, Kraljic's (1983) approach to supply management provides a useful insight (Gelderman and van Weele, 2003). In his approach the purchasing turnover and the supplier base are analysed based on two variables (van Weele, 2002): supplier's impact on the financial result (measured in costs of purchase of a certain product category or impact on product quality) and supply risk (measured against criteria such as number of potential suppliers, availability of supply, competitive structure in supply markets). The implication of halal for the purchasing portfolio matrix and the supply management strategy has two possible effects. First halal has impact on the financial result for producers of halal sensitive products, namely: “Is the product animal based?” [yes/no]. Examples of animal based products are raw meat, processed meat and ingredients/additives derived from animals (like gelatine). If the product is animal based it would move a traditional routine supplier to leverage or a bottleneck supplier to strategic. Second, halal has impact on the supply risk: “Is the supply chain partner based in a non-Muslim country?” [yes/no]. Partners in non-Muslim countries that offer halal compliant products and services have invested in halal certification/compliance, are specialised and are often not well controlled and supported by its government in terms of its halal compliance. This requires a more intensive relationship with these supply chain partners, which moves a traditional routine supply chain partner to bottleneck or a leverage supply chain partner to strategic for non-Muslim countries. The implication of halal on the purchasing portfolio matrix is shown in Figure 2.

As can be deducted from the strategies for each quadrant as described by Kraljic (1983), halal leads to stronger partnerships for strategic and leverage supply chain partners; and adopting various strategies to secure continuity of supply, if necessary against at additional costs, for bottleneck supply chain partners.

Supply chain resources

Supply chain resources describe the organisation and information management. For a halal certified organisation a halal committee is required (Department of Standards Malaysia, 2005, 2010a, b, c; Port of Rotterdam, 2007). The halal committee is responsible for the compliance of the management and practices according to a halal standard. The halal committee drafts a halal policy, which is endorsed by the managing director/CEO of the company. This halal committee preferably has a halal compliance officer that acts as an internal auditor, however this could also be outsourced to an independent party (not the halal certification company).

Supply chain network structure

The supply chain network structure is a network of connected and interdependent organisations mutually and co-operatively working together to manage, control and improve the flow of materials and information (Aitken, 1998). Halal food supply chains are vulnerable (Bonne and Verbeke, 2008; Zailani et al., 2010) and supply chain configurations can be the source of risks (Olson and Wu, 2010): partner related risks as well as internal organisational processes in risk assessment and response. For the integrity of halal supply chains it is therefore crucial that the parties in a halal supply chain are halal certified (preferred) or understand and comply with the requirements of halal supply chains. As the supply chain integrity is a function of the integrity of the supply chain partners, the choice of supply chain partners should therefore receive top priority in the design of supply chain network structures. Similar to organic supply chains (Claro and de Oliveira Claro, 2004), there is a preference for simple supply chain structures and need for coordination in halal supply chains.

Supply chain business processes

The Global Supply Chain Forum has identified eight key supply chain business processes (Lambert et al., 1998): customer relationship management, customer service management, demand management, order fulfilment, manufacturing flow management, procurement, product development and commercialisation, and returns. For halal food supply chains, the supply chain business processes customer order fulfilment, manufacturing flow management and procurement are of particular importance. The customer order fulfilment process carries the segregation requirements of the customer (destination market) throughout the supply chain. The manufacturing flow management is the physical handling of the halal product throughout the supply chain, for which halal control activities and assurance activities need to be formulated to extend the halal integrity from source to point of consumer purchase. This process also covers logistics. Finally procurement is critical in a halal food supply chain, for its role in defining and managing the upstream supply chain network structure through commodity strategies (purchasing strategy); determine specification, supplier selection and integration (tactical purchasing); and ordering, expediting and evaluation of suppliers (order function) (van Weele, 2002; Kraljic, 1983; Wagner and Johnson, 2004). As argued by Cousins et al. (2008) the role of socialisation mechanisms, the means by which the buyer-supplier engagement appreciates the halal values, is critical as it fully mediate the effects of supplier performance measures on supply chain performance.

Halal supply chain performance

Current supply chain performance measurement systems are mainly cost related and are not inclusive (Estampe et al., 2010; Aramyan et al., 2007, Bhagwat and Sharma, 2007; Chia et al., 2009). However, there are some examples of more balanced frameworks, like the conceptual framework of agri-food supply-chain performance indicators (Aramyan et al., 2006) and various balanced scorecard perspectives. But even these balanced metrics lack the measurement of the credence aspect of halal products, the Islamic value factor as well as the robustness requirements. Therefore, these metrics would not be effective to optimise halal supply chains. For halal food industries to optimise their supply chain, it should include new indicators in their performance measurement systems in order to ensure that their supply chains are not only efficient, but also effective in protecting the halal integrity and robust in its supply chain execution.

To measure the performance of halal supply chains, it is foremost important to measure the effectiveness perspective of a supply chain. This would address two key aspects, namely process quality (Andersen, 1994; Bonne and Verbeke, 2008) and waste (Abdul-Matin, 2010). Process quality addresses the strength/trust of a brand, the credibility of a halal certificate and the consumer complaints received regarding the halal status of a product. Waste addresses the physical waste in a supply chain, carbon footprint and resources used. Waste occurs in the supply chain as well as by the end-consumer. Waste in the supply chain can be avoided or minimised by using the right (re-usable) transport packaging and environment control (temperature and moisture level). Waste by the end-consumer is more difficult to manage from a supply chain, but could address for example less environmental burdening consumer packaging or buying products that have lower food miles (Lammers et al., 2010). Although food miles are easy to calculate and a relevant indicator for sustainability, it has its limitations due to the high impact of transportation mode, transportation efficiency and differences in food production system on the sustainability of a food supply chain (Smith et al., 2005; Weber and Matthews, 2008; Coley et al., 2011). Today, the carbon footprint has become a key measurement of environmental impact in SCM (Lee and Cheong, 2011; Wiedmann and Minx, 2008; Svensson and Wagner, 2011). As energy consumption today is mainly based on non-renewable energy, energy consumption is an important indicator to measure for waste in a halal supply chain (Abdul-Matin, 2010).

Second, halal supply chains should also be efficient in order to avoid an escalation of halal food prices. This would affect in particular Muslims consumers living in non-Muslim countries, which would create hardship (Laldin, 2006) for them. Efficiency can first of all be measured by the SCM costs. Furthermore, as halal will require possible dedicated logistics infrastructure, a suitable indicator could be the utilisation of halal storage facilities and halal transport/containers.

Third, halal supply chains should be robust by design in order to better protect the halal products along the supply chain under different circumstances (Tieman, 2011). Important strategies are the development of a strong alliance network, lead-time reductions and efficient coordination (Lammers et al., 2009; Tang, 2006). The robustness of a halal supply chain should first of all result in little halal rejects. Second, a halal supply chain should have sufficient access to dedicated halal warehouses and halal transport/containers when required. Table II presents an overview of the key perspectives and the proposed performance measurements.

To operationalise the research framework (Figure 1), a large discussion group and focus groups have been used. Next section will discuss the research methodology followed.

3 Methodology

According to de Ruyter (1996), Hines (2000), Stokes and Bergin (2006), Sekaran (2007), and Walden (2006) focus groups are an effective instrument in order to obtain a rich understanding of a new phenomenon, such as halal SCM. Focus groups envision obtaining a better understanding of the logistics business processes involved in halal food supply chains for Muslim and non-Muslim countries. We have followed the following four step approach (McClelland, 1994; Walden, 2006):

(i) Organisation of the sessions

Under the aegis of IHI Alliance, a series of focus groups have been conducted with the incentive to assess and design the halal supply chain model (Wall, 2001; Carlock and Perry, 2008; Chambers and Munoz, 2009). The first session can be characterised as a large discussion group according to the categorisation of Larson et al. (2004). The objective of this first session was to build consensus (Larson et al., 2004) on the:

  • scope of halal logistics;
  • principles in halal logistics; and
  • foundation of halal logistics for Muslim and non-Muslim countries.

After this first session the group was split into smaller homogeneous focus groups (McClelland, 1994; Kitzinger, 1995; Grudens-Schuck et al., 2004; Walden, 2006; Sekaran, 2007) on warehousing, transportation and terminals. These focus groups required 8 to 12 participants (Larson et al., 2004; Grudens-Schuck et al., 2004; Sekaran, 2007). As argued by Kitzinger (1995) and Grudens-Schuck et al. (2004), it is important to have multiple sessions in order to get a cross section of views from a diverse population. For this purpose IHI Alliance had chosen the Netherlands and China to conduct review sessions. The objective of the focus groups is to identify the halal control activities and assurance activities in warehousing, transportation and terminal operations for Muslim and non-Muslim countries, based on personal perceptions (Larson et al., 2004).

(ii) Recruiting the participants

For the first large discussion group, IHI Alliance invited a variety of participants, consisting of leading Shariah and halal experts from Malaysian universities, halal standard experts form the Malaysian Government, halal exports from the industry (manufacturers, retailers and logistics service providers), and logistics service providers. For the consecutive focus group sessions, IHI Alliance also facilitated the invitations, which resulted in the required number of participants for the focus group sessions. The warehouse session (Malaysia) had representatives from logistics service providers, halal expert from the Malaysian Government, trade representative from the Malaysian Government, retail chains, an IT expert and a Malaysian university. The transportation session (Malaysia) had representatives from logistics service providers, a manufacturer, a halal expert from the Malaysian Government, and a Malaysian university. The terminals session (Malaysia) had representatives from Malaysia's largest seaports, the national airline (air cargo terminal handler), logistics service providers, a halal expert from the Malaysian Government and a Malaysian university. The focus group in the Netherlands had representatives from halal authorities, halal certified food manufacturers, traders, the Port of Rotterdam, logistics service providers and trade representative from the Malaysian Government. The focus group in China had representatives from various halal authorities from the Asia Pacific, a logistics service provider, an international standard expert and a trade representative from the Malaysian Government.

(iii) Conducting the discussion sessions

The large discussion group session held in Kuala Lumpur (Malaysia) had 33 participants and took one full day. The large discussion group started with a presentation on halal logistics and SCM and its importance to familiarise the participants with this new topic of halal logistics. Based on this large discussion group it has been agreed to conduct dedicated focus group sessions on the warehouse, transport and terminal operations. Half-day focus group sessions have been held in Malaysia on warehousing (12 participants), transportation (eight participants), and terminals (eight participants). For each focus group sessions the principles have been first shared with the participants (results of the first large discussion group). Then halal control activities and assurance activities have been identified during each focus group session. These halal control activities and assurance activities have been reviewed during half-day focus group sessions in Rotterdam (the Netherlands), with 12 participants, and in Hong Kong (China), with ten participants.

(iv) Analysing and reporting

The large discussion group and consecutive focus group sessions have been voice recorded and transcribed (Kitzinger, 1995; Grudens-Schuck et al., 2004). In line with de Ruyter (1996), Walden (2006), and Chambers and Munoz (2009), ideas have been classified in categories. This in order to discover patterns (Grudens-Schuck et al., 2004).

The validity, correctness or credibility of the large discussion group and focus group sessions, consists of strategies to identify and rule out the threats that you might be wrong (Maxwell, 2005). Prince and Davies (2001) have identified moderator bias as a serious concern in conducting focus groups that can involve the content, the process or participation and the interpretation of the research results. According to Grudens-Schuck et al. (2004), the questions have been arranged from general to specific to invite openness and avoid bias. Second as argued by Prince and Davies (2001), the moderator (the researcher) should be well versed in the topic of halal logistics, which has been the case through his experience in Malaysia in halal projects as well as his contribution as writer for The Halal Journal. As the moderator has spent more than seven years in Malaysia, he is also aware of the Malaysian culture. Wall (2001) argues that the representativeness of the participants is an issue in focus groups. This issue has been anticipated by the researchers in having IHI Alliance, with a global network of halal experts, sending out and follow-up the invitation for the large discussion group and consecutive focus group sessions. To avoid the threat that the halal control activities and assurance activities are only valid in Malaysia, triangulation (Maxwell, 2005) has been achieved by organising consecutive focus group sessions outside Malaysia: in the Netherlands and China.

4 Results

4.1 Large discussion group

A large discussion group was conducted to build consensus (Larson et al., 2004) on the:

  • scope of halal logistics;
  • principles in halal logistics; and
  • foundation of halal logistics for Muslim and non-Muslim countries.

For a proper scoping, both the width and depth of halal logistics has been agreed upon. In terms of width it has been agreed to cover warehousing, transportation and terminal operations. In terms of depth, the following topics should be addressed in halal logistics, namely: definitions, process requirements, procedures, tracking and tracing, clean(s)ing (as corrective measure), packaging and labelling, organisation, and certification. For warehousing, transportation, and terminal operations, dedicated focus group sessions have been held to address these topics in greater detail. Halal logistics has been defined as the process of managing the procurement, movement, storage and handling of materials, parts, livestock, semi-finished or finished inventory both food and non-food, and related information and documentation flows through the organisation and the supply chain in compliance with the general principles of Shariah.

During the large discussion group five principles of halal logistics have been formulated and agreed upon:

  1. intention to create a global halal logistics system;
  2. minimise hardship for the halal industry;
  3. define cross contamination between halal and haram and how to avoid it;
  4. create an evolution of a complete halal value chain and supply chain; and
  5. benchmark with existing halal standards, best practices, and international standards.

The intention is to create a global halal logistics system, regardless of the Islamic school of thought, that is Shariah compliant and sets the best practice for ensuring halal integrity throughout the supply chain to protect the halal integrity for the end-consumers. This is by itself already an important measurement for the validity of this action (Laldin, 2006). To minimise hardship for the halal industry is in line with Al-Qaradawi (2007) and Laldin (2006). During the large discussion group it was mentioned and stressed by multiple participants, that a halal logistics system should be fair and practical. Also a halal logistics system should not significantly increase the cost of halal products, as this would be an important determination for the global acceptance of a halal logistics system. One of the participants also mentioned that safety should come first, which for example applies to the loading of vessels and aircrafts. Another important principle is to define contamination between halal and haram and how to avoid it. A little bit haram makes a product non-halal (in case of cross contamination) and in case of doubt, the product should be avoided (Al-Qaradawi, 2007). It is extremely important that halal products are segregated from non-halal products, to avoid cross contamination, mistakes and to ensure that the operations are consistent with Shariah and the expectations of the stakeholders. As halal logistics and SCM is a new discipline in halal, an evolution is needed of a complete halal value chain and supply chain. The integrity of a halal product for the consumer (and therefore the halal supply chain) is a function of the integrity of the various links in a supply chain (van der Vorst, 2006). As conventional halal standards are traditionally focused on the slaughtering and production, the integrity of the entire halal supply chain has not been controlled. Also recognising the challenge of introducing halal logistics in non-Muslim countries, where the halal (certified) volumes are much smaller than in Muslim countries, halal logistics will need to go through an evolution. It was therefore suggested to establish a minimum standard (applicable to non-Muslim countries) and a preferred standard (applicable to Muslim countries and to non-Muslim countries over time). Finally, a benchmark with existing halal standards, best practices and international standards is important as foundation of a halal logistics system.

During the large discussion group, three levels have been identified in relation to the foundation of halal logistics in Muslim and non-Muslim countries, which is based on direct contact with haram, risk of contamination and perception of the Muslim consumer. Recognising that a supply chain perspective to halal is new, it was decided to create a minimum level of compliance, which is addressing direct contact with haram as well as the risk, and a preferred level, which is addressing also perception. The minimum level should be irrespective of the different Islamic schools of thought and not contradicting Shariah, whereas the preferred level should amongst others address the sensitivity of Muslims: the particular Islamic school of though, local fatwas and local customs. If possible for Muslim countries, it should be envisioned to meet the preferred level of a halal logistics system, whereas for non-Muslim countries a minimum level could be more practical or feasible. However, in time also a preferred level could be achieved by certain non-Muslim countries. For exports the standard applied should match at least the requirements by the importing country. Figure 3 shows an overview.

The large discussion group allowed achieving consensus on various more key principles in halal logistics. It was first of all confirmed that halal requires a supply chain approach and logistics is critical in ensuring the halal integrity for the Muslim consumer. Halal logistics requires also a process approach, where processes and procedures have to be clearly documented as proof of a halal logistics system. Although a halal logistics system should prevent contamination to occur, also corrective measures will need to be defined to limit the risk of contamination of other halal cargo as well as to “repair” the perception/sensitivity of the Muslim consumer. It has also been agreed by all that there are different levels of najs (filth), which might be more practical to consider for the level of segregation. For this the MS 1500:2004 (Department of Standards Malaysia, 2004) would be used as a benchmark. Consensus was formed that the halal integrity is confined to a container or transport vehicle. Therefore, it does not matter what is on top, below, or next to a halal container/transport vehicle. In terms of tracking and tracing, it has been agreed by all to cover only tier one customers and suppliers (Lambert et al., 1998; Lammers et al., 2009) as the width of traceability; and second, to limit the traceability depth to the chain of custody. This is in line with the EU regulations for food supply chains. The technology for tracking and tracing has not been specified, as it should be open, and not create any thresholds for small players without advanced information and communication technology to comply with.

According to the large discussion group an important determinant for the vulnerability of halal food supply chains is the product characteristics. Refrigerated products, like fresh meat, are found to be more sensitive for contamination as compared to dry products, such a canned fish, packed chocolate cookies and a bottle of cola (ambient environment). Second, bulk products have a higher perceived risk than unitised products, as bulk products directly touch the container or transport vehicle. The level of segregation is therefore determined by both product characteristics as well as market requirements.

4.2 Focus groups

There are significant differences between Muslim and non-Muslim countries from the focus group sessions held in Malaysia, the Netherlands and China. In Muslim countries, toyyib (wholesome) can be seen as a component of halal, whereas in non-Muslim countries halal can be seen as a component of toyyib. Although in non-Muslim countries non-Muslims understand that direct contact with haram should be avoided, the risk and perception factor is not well understood. From the focus group discussions it followed that perception is very important for Muslim countries. For logistics, perception in a Muslim country can be regarded as a homogeneous factor. However, in non-Muslim countries, with Muslims from diverse Islamic schools of thoughts, this is not the case. This results in a more heterogeneous and therefore more complex perspective on perception. The focus group sessions in Rotterdam and Hong-Kong showed that in non-Muslim countries the halal goods flows are small, which do not allow for dedicated halal infrastructure as it would increase the cost of halal products dramatically and would result in certain countries or parts of a country halal products are not available. As this would incur hardship for Muslims living in non-Muslim countries, it was clear that two levels of segregation were needed, a minimum and a preferred level. For non-Muslim countries this is based on the minimum level: direct contact with haram and risk of contamination. For Muslim countries this is based on the preferred level: direct contact with haram, risk and the perception of the Muslim consumer. During the focus group session on the warehouse it was stressed that it is critical to maintain consistency in the minimum integrity level throughout the supply chain: transportation, warehouse and terminal. In transportation, loading and stuffing is the most critical activity. As a dedicated halal terminal is difficult, segregation is critical through coding, marking and identification. The discussions in Malaysia emphasised on the importance of the competency in halal for the people involved in the halal logistics operations. As Europe is exporting to many Muslim countries in the Middle East and Asia it has a preference to comply with the most stringent level for its export to Muslim countries, which is accepted by all Muslim countries worldwide, instead of the need to modify processes and procedures depending on the specific Muslim country. The Netherlands halal certification body suggested differentiating between haram (clearly prohibited) and non-halal (not certified halal). It was argued by the various parties present that halal and haram should not be put together in cold chain environment, whereas halal and non-halal slaughtered meat (from a halal livestock) could for example be very well stored in the same cold room or transported in the same container/transportation vehicle, which would benefit the utilisation of cold rooms and transport of halal products.

Halal assurance activities have been assessed for warehousing, transportation, terminal operations and clean(s)ing (as corrective measure). A warehouse has the following logistics processes (Frazelle, 2002; van Berg, 2007; The Singapore Logistics Association, 2008; Engelbregt and Kruijer, 2009): receiving, put-a-way, storage, cross-docking, value added logistics (VAL), replenishing, order picking and shipping. The halal control activities and the corresponding assurance activities for the warehouse as identified, reviewed and agreed upon are shown in Table III. Tables IV-VI show the halal control activities and assurance activities for transport, terminals and clean(s)ing as identified, reviewed and agreed upon.

From the focus groups it follows that the major obstacles of halal food supply chains are:

  • the level of segregation required at the last mile to retail in non-Muslim countries;
  • the level of segregation required at cold rooms in air terminals in non-Muslim countries;
  • consolidation on air cargo pallets at airports;
  • stuffing of less-than-container load containers;
  • understanding of halal in non-Muslim countries; and
  • the lack of protection of halal in non-Muslim countries.

The major success factors of halal food supply chains found are:

  • communication of “halal supply chain” code through freight documents and ICT systems;
  • capitalising on the halal product flows in non-Muslim countries that are not sold as halal certified products;
  • the application of innovations to simplify segregation in a non-Muslim environment;
  • first-mover advantage; and
  • taking a manufacturer/brand owner perspective in halal logistics.

5 Conclusion

Through extensive literature review, a large discussion group and focus groups, a framework has been introduced to optimise the design of halal food supply chains. The halal supply chain model consists of the following elements: halal policy, supply chain objectives, logistics control, supply chain resources, supply chain business processes, supply chain network structure, and halal supply chain performance. This model is developed through a combination of existing supply chain models, namely the integral customer service concept (van Goor, 1991; van Amstel and van Goor, 2001), the SCM framework (Lambert et al., 1998) and the framework for chain/network development (van der Vorst and Beulens, 2002). Although existing (food) supply chain models do not contradict Shariah, these models have not addressed important aspects in the design and optimisation of halal food supply chains. First, a halal policy is the basis of a halal supply chain model to ensure the right intention and guide the organisation in addressing Islamic values in its halal food supply chains. Second, a halal supply chain model provides practical guidance on the specific design parameters, which allows operationalisation of the halal supply chain model.

From the large discussion group and focus group sessions it can be deducted that the product characteristics (bulk versus unitised and ambient versus cool chain) and market requirements (Muslim versus non-Muslim country) influence the vulnerability of halal supply chains. Vulnerability of supply chains is reduced through simplifying the supply chain structure and establishing halal control activities and assurance activities in logistics business processes. Vulnerability can be avoided in (parts of) the supply chain by having dedicated logistics infrastructure, like a dedicated halal warehouse and transport, or through containerisation at a lower level. The remaining vulnerability determines the robustness of a supply chain. As the market requirements (Muslim or non-Muslim country) determine the level of segregation, a dedicated Halal Regional Distribution Centre (HRDC) can become an important CODP (Olhager, 2010) for the last mile. A strategic fit (Hofmann, 2010; Schnetzler et al., 2007) has been realised by the formulation of a halal policy and supply chain objectives (functional requirements) that determine the design parameters. Second, an alignment (Fisher, 1997) has been achieved by defining the relationship between product-market combination and the design parameters.

Coordination is critical in halal supply chains to consolidate halal cargo flows. This is especially important for non-Muslim countries in achieving efficiencies in halal supply chains. Second, depending on the destination market a halal supply chain requires a certain specified level of segregation throughout the supply chain. This will impact decisions in supply chain planning and execution, which need to be well communicated to the supply chain partners. This research confirms that in non-Muslim countries the supply chain partners that are halal certified or compliant are much more scarce and require an important focus in the management of halal supply chains. The use of a CODP at a dedicated HRDC allows customising the halal segregation level from the HRDC onwards.

This research also addressed supply chain resources. As halal logistics has implications for the warehousing, transportation and terminal operations, extensive training is required for the operations staff to assure the halal integrity of the logistics operations. In non-Muslim countries there would be benefits by developing innovative logistics cargo solutions, like containerisation at lower level, to simplify segregation for export markets. Sharing the halal status of cargo through the “halal supply chain” code has been argued to be one of the most important critical success factors for effective halal supply chains. Tracking and tracing is limited to only tier 1 customers and suppliers as the width of traceability; and second, to limit the traceability depth to the chain of custody only.

This research also addressed supply chain structure. First of all simple supply chain structures are more effective in realising robust halal food supply chains as compared to long and complex supply chains. The choice of a gateway is also important, as at terminals there are a lot of supply chain vulnerabilities. International gateways that are halal certified or understand halal would have a clear preference for the distribution of halal goods.

The focus groups allocated significant time to discuss the supply chain business processes. The halal control activities and assurance activities identified in transportation, warehousing, terminal operations and clean(s)ing provide practical guidance for the industry in designing and managing logistics business processes for certain product-market combinations. The halal control activities and assurance activities have been reviewed by the Shariah panel of IHI Alliance and have been amended accordingly and published by IHI Alliance as the International Halal Logistics Standard IHIAS 0100:2010 (IHI Alliance, 2010), which can be certified globally. This standard is also used as the reference for the halal supply chain initiative, a global initiative to promote the integrity of halal supply chains. Figure 4 shows the results of the large discussion group and focus groups in the halal supply chain model in realising robust halal food supply chains.

6 Suggestions for further research

As argued by Eisenhardt (1989), Voss et al. (2002), Riege (2003), Woodside and Wilson (2003), and Yin (1984), a case study can be an important tool in building theories in new disciplines like halal SCM. Although it is expected that the components and detailing of the halal supply chain model are relatively complete, these case studies could allow for a further refinement of the halal supply chain model for specific product-market combinations of halal food supply chains.

This paper introduces the halal supply chain model for halal food supply chains. Next to halal food, there are also other categories of goods where halal matters, such as cosmetics and pharmaceuticals. Although the halal supply chain model can be an effective instrument to design efficient, effective and robust halal food supply chains, it might not result in a most efficient, effective and robust design for halal cosmetics and pharmaceuticals. Even though halal cosmetics and pharmaceuticals could benefit by applying the same principles, it might require for example less stringent regulations as compared to halal food and therefore could create unnecessary hardship. It is therefore recommended to conduct a separate qualitative research on the application of halal in the management of cosmetics and pharmaceutical supply chains.

ImageFigure 1Halal supply chain model
Figure 1Halal supply chain model

ImageFigure 2Impact of halal on purchasing portfolio matrix
Figure 2Impact of halal on purchasing portfolio matrix

ImageFigure 3The foundation of halal logistics
Figure 3The foundation of halal logistics

ImageFigure 4Robust halal supply chain model
Figure 4Robust halal supply chain model

ImageTable IExisting SCM models
Table IExisting SCM models

ImageTable IIHalal performance indicators
Table IIHalal performance indicators

ImageTable IIIHalal control activities and assurance activities in the warehouse
Table IIIHalal control activities and assurance activities in the warehouse

ImageTable IVHalal control activities and assurance activities in transport
Table IVHalal control activities and assurance activities in transport

ImageTable VHalal control activities and assurance activities in terminals
Table VHalal control activities and assurance activities in terminals

ImageTable VIHalal control activities and assurance activities in clean(s)ing
Table VIHalal control activities and assurance activities in clean(s)ing

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About the authors

Ir Marco Tieman has been a PhD candidate with Universiti Teknology MARA (Malaysia) since 2006. His research focuses on the application of halal in supply chain management. He obtained his Master's degree in Industrial Engineering with the University of Twente (The Netherlands) in 1997. He is currently the CEO of LBB International, an international logistics consultancy and research firm specialised in agri-food supply chains. He chaired the development of the international halal logistics standard under the Islamic Chamber of Commerce and Industry and IHI Alliance. Marco Tieman is the corresponding author and can be contacted at: marco@lbbinternational.com

Dr Ir Jack G.A.J. van der Vorst (1970) is Full Professor of Logistics and Operations Research at Wageningen University in The Netherlands. He obtained his PhD degree in 2000 with a thesis entitled “Effective food supply chains; generating, modelling and evaluating supply chain scenarios”. His current research focuses on the development of innovative logistics concepts in agri/food supply chain networks and the quantitative modelling and evaluation of such concepts. He is (co-)author of many articles in peer reviewed journals, such as International Journal for Production Economics, International Journal for Production Research, International Journal of Physical Distribution & Logistics Management and Decision Sciences.

Dr Maznah Che Ghazali is Associate Professor at the Faculty of Business Management, Department of Marketing with Universiti Teknology MARA (Malaysia). She has published articles in Total Quality Assurance and Business Management and has a case study published in INSEAD-MPC.