operation-halal in supply chain management

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The application of Halalin supplychain management: in-depth

interviewsMarco Tieman

Business Management Faculty,Universiti Teknologi MARA, Shah Alam, Malaysia

Abstract

Purpose The paper aims to describe the basic requirements ofHalalfood supply chains in order toensure the integrity ofHalalfood at the point of consumption, which is an obligation for Muslims.

Design/methodology/approach This exploratory research paper is based on in-depth interviewsto better understand what isHalal, the Islamic sources that are essential forHalalsupply chains, and

identify the guidelines and principles which are essential for the integrity ofHalalsupply chains.

FindingsHalal supply chain management is based on avoiding direct contact with Haram,addressing the risk of contamination and ensuring that it is in line with the perception of the Muslimconsumer. In particular, the product and market characteristics are important variables in the supplychain management of Halal supply chains. Further empirical research is needed to measure theperception of the Muslim consumer. A better understanding is also required into the principles inorganising theHalalsupply chain for different markets (Muslim and non-Muslim countries). There is aneed for a Halalsupply chain model that is able to describe and optimise Halalsupply chains.

Research limitations/implications Since this paper is an exploratory study, it provides someinsights into the considerations in organisingHalalsupply chains. However, further qualitative andquantitative research is needed in order to provide the industry with concrete tools to design effective

Halalsupply chains.

Practical implications In response to the logistics industry that started with Halal logistics

solutions, the Halal certified food industries needs to know whether and how to start with a Halalsupply chain approach. This paper presented key considerations to address in organising effective

Halalsupply chains.

Social implications Halalin non-Muslim countries is not very well understood, where in logisticsonly the aspect of avoiding of contact with Haram is addressed mainly through packaging. Thisarticle presents a better understanding of Halal and the application of Halal in supply chainmanagement.

Originality/value There is a lack of academic research in Halal logistics and supply chainmanagement. This exploratory research provides some basic fundamentals on the supply chainmanagement ofHalalproducts.

KeywordsHalal supply chain, Supply chain management, Halal logistics, Islamic culture, Halal, Islam

Paper typeResearch paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1759-0833.htm

The authorwould like to thankthe following peoplefor their participation in thein-depth interviews:Mr Darhim Hashim (IHI Alliance Ltd, Malaysia), Mr Ahmad Azudin Abd Khalid (IHI Alliance Ltd,Malaysia), Professor Dr Abd-Elaziem Farouk (Brunei Darussalem University, Brunei),Professor Dr Yaakob Che Man (Universiti Putra Malaysia, Malaysia), Dr Suhaimi Ab. Rahman(Universiti Putra Malaysia, Malaysia), Associate Professor Dr Mohamad Akram Laldin(International Shariah Research Academy for Islamic Finance, Malaysia), Associate ProfessorGhaffarullah (Universiti Teknologi Mara, Malaysia), Dr Nor Azman (HalalIndustry DevelopmentCorporation, Malaysia), Mr Irfan Sungkar (University of Malaya, Malaysia).

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Journal of Islamic Marketing

Vol. 2 No. 2, 2011

pp. 186-195

q Emerald Group Publishing Limited

1759-0833

DOI 10.1108/17590831111139893


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1. IntroductionHalalis aQuranicterm that means permitted, allowed, lawful or legal. Its opposite isHaram (forbidden, unlawful or illegal). In Islam and according to Shariah (Islamic Law),all issues concerningHalalorHaramand even all disputes should be referred to Quran

andSunnah(prophetic tradition) (Doi, 2007).HalalandHaramare universal terms thatapply to each activity carried out by man, whether it is related to his ibadator muamalator muasharah. However, Halalin relation to food is specified by the Quran and theSunnah(Hussaini, 1993; Mohamad, 2005). As also argued by Laldin (2006) is that newdevelopments, such as Halalsupply chain management, require a concerted effort tounderstand and expand the deductions from the main sources of Islam: the QuranandSunnah.

Muslims want assurance that the products they consume are a true manifestation ofIslamic principles, plus they should be toyyib, meaning wholesome and good (WorldHalalForum, 2009). As the Halal integrity of the product is a result of the variousactivities in the supply chain, a supply chain approach is important to guarantee the

Halal integrity at the point of consumption. According to Bonne and Verbeke (2008)Muslim consumers lack information on the supply chain and cannot be reassured thatno cross-contamination has taken place. This is one of the main reasons that Muslimsin Europe have been buying theirHalalproducts from Muslim butchers in non-Islamiccountries, as the Muslim butcher then carries the responsibility to God to ensure themeat isHalal(not anymore the consumer). Although current Halalstandards regulatefood production, preparation, handling and storage to some degree, it does not ensurethat the product is Halal at the point of consumption (Tieman, 2006). In particular,Halal logistics capabilities are critical in ensuring the Halal integrity of the supplychain from farm to fork (Tieman, 2007).

What does a Halalproduct and a Halalbrand really means? In the pure technicalsense, a Halal product is a product fit to consume for Muslims. This can be food,cosmetics (like tooth paste) or even relate to pharmaceuticals (like cough syrup). A trustmark (Halallogo) can be placed on the Halalproducts for Muslims to know that theproduct is Halal(Cheng, 2008). Recently, Halalstatus products also have extended tolifestyle (like clothing) and services (like Islamic banking, hospitality, logistics, etc.)(Alserhan, 2010b).Halalas a concept cannot be fully encapsulated within the constructof product, Halal reaches much further into the disciplines of management of thecompany, organisational behavior, culture anthropology and sociology (Wilson and Liu,2010; Zakaria and Abdul-Talib, 2010). As argued by Lada et al. (2009), Alserhan (2010a),Ibrahim and Mokhtarudin (2010) and Wilson and Liu (2010),Halalneeds a supply chainapproach. Halalshould also take into consideration the spiritual needs of the Muslimconsumers (Alserhan, 2010b) and Islamic values (Zakaria and Abdul-Talib, 2010).

Zakaria and Abdul-Talib (2010) argue for a cultural perspective of market orientationand created an Islamic market-oriented cultural model. Hofstedes (1991) onion diagramprovides a useful framework to identify the different aspects of Islamic culture. Hofstedeand McCrae (2004) describe culture as the collective programming of the mind.He stresses that culture is a collective attribute, not distinctly visible, but manifested inbehaviors and common to some but not all people. The onion diagram from Hofstede

(1991) describes culture as an onion with different layers consisting (from core to outerlayer) of: values, rituals, heroes and symbols.

Halasupply chmanagem

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The word Halaland its Arabic character is an important mark (symbol), whichsymbolisesHalal. Prophet Muhammad exhibited the best conduct, and his life is the bestexample to emulate and follow (hero) (Hussaini, 1993, p. 7). The records of the actionsand sayings of the Prophet have been written in the Sunnah (Laldin, 2006, p. 2).

Amongst others, important procedures (rituals) in Islam are the Islamic way ofslaughtering and for certain Islamic schools of thought (like the Shafii) also prescriberitual cleansing, better known as Samak. The core (values) of the Islamic culture is basedon the Holy Quran, which is the vouchsafed Word of Allah (Laldin, 2006, p. 2).By adopting this model for Islamic culture, the following model can be drafted as shownin Figure 1.

Although it can be argued to classify Halal products and brands according tocountry of origin and focus market (Alserhan, 2010b), it could also be argued thatHalalgoes through an evolution as shown in Table I.

In the first phase (Muslim company) theHalalsupply chain is purely based on trust.A Muslim is buying from another Muslim, and therefore the seller will be responsible toGod for ensuring that the food he/she is selling is Halal. In this way, the buyer hassufficient confidence that the Halalhe/she is consuming is Halal. In the second phase(Halalproduct) an important basis for trust is theHalalcertification (mark) behind thisproduct as shown on the consumer product or outlet (in case of a meat shop orrestaurant). ThisHalaltrust mark provides assurance that the product, its source andfacility have been verified by an independent Islamic Certification Authority to becompliant with Shariah. In the third phase (Halalsupply chain), the Halaltrust markprovides assurance that the entire supply chain is compliant with Shariah, which isaudited and certified by an Islamic Certification Authority. The third phase recognisesthe sensitivity of supply chains and ensures robust Halal supply chains that betterprotect theHalalintegrity for the end-consumer. In the fourth phase (Halalvalue chain),

Figure 1.Islamic culture

Quran

Islamic slaughtering

Sunnah

Source: Adopted from Hofstede (1991)

Samak

Halallogo

Prophet Muhammad

Halalbrand

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Halalcovers the entire value chain. In this phase, Islamic food multinationals controlentire supply chains from seed to fork. (Islamic) science is important to ensurehigh-performance supply chains. As alternative to the highly fluctuating US dollar andEuro, an international Islamic currency will be used for internationalHalaltrade. Insteadof current green movements that have the ambition of being environmental neutral, thefutureHalalvalue chain will create value, value for the community as well as the Earth.

2. MethodologyThe in-depth interview envisions obtaining a better understanding from the Shariahperspective, what the application is ofHalalfor supply chain management. Accordingto Hannabuss (1996), Wright (1996), Maxwell (2005) and Sekaran (2007) the in-depth

interview is an effective tool in order to obtain a rich understanding of a newphenomenon, such as Halalsupply chain management is.The in-depth interviews intend to understand the application of Halal in supply

chain management. More specifically, what needs to be understood is:

. What is Halalfrom a logistics, supply chain management point of view?

. Which Islamic sources are essential for Halalsupply chain management?

. Which guidelines and principles are essential for the Halal integrity of Halalsupply chains?

Phase 1 2 3 4

NameMuslimcompany Halalproduct

Halalsupplychain Halalvalue chain

CharacteristicsofHalalsupply chains

Based on trust Based on localHalalstandardSource is Halalcertified

Based oncomplex set oflocal, regionalandinternational

HalalstandardsInternational

Halalmanufacturingand distributionzones

Islamicmultinational foodcompanies thatcontrol entiresupply chains fromseed to forkIslamic sciencebasedHalalsupplychainsOne internationalIslamic currency

Issues inHalalsupply chains

Lack ofHalalcertification

authorityHalalintegrityconcerns onimports

Efficiency ofHalalcertification

Transparency ofHalalstandardLack ofHalalcertifiedingredients

Halalstandardsare not

harmonisedLack of certifiedlogistics serviceproviders

Lack of Islamic andHalalresearchers

Lack of foodscientistsOwnership ofnatural resources

Examplecountries

Many countriesin the MiddleEast, Africa,Asia andEastern Europe

GCC countries, Indonesia,Singapore, Thailand,the USA, Canada, France,The Netherlands,Australia, New Zealand,Bosnia, the UK

Malaysia andBrunei are in theearly stage ofphase 3

None

Source:OriginalTab

Evolution of


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Purposive sampling was carried out to meet with international leading Shariah andHalalexperts, which are based in Malaysia and Brunei. The persons interviewed wereidentified as having a solid expertise in Shariahand Halalas well as being currentlyactive in Halalresearch and/or innovation at international level playing field. These

experts were chosen from the following organisations: International Halal IntegrityAlliance (Malaysia), Brunei Darussalem University (Brunei), University PutraMalaysia (Malaysia), International Shariah Research Academy for Islamic Finance(Malaysia), Universiti Teknologi MARA (Malaysia), Halal Industry DevelopmentCorporation (Malaysia), and the University of Malaya (Malaysia). Random samplingwas not possible given the small number of experts in this field. However, the samplewas cross-checked through desk research in Malaysian academic and professionalpublications onHalal. A first interview was tested with a friendly party, IHI AllianceLtd, to modify the questions further were needed. As the topic of the research thesiswas of high interest to the persons contacted, it was easy to arrange for an in-depthinterview without any rejects. Although the sample size was small with seven

interviews, it was possible to conduct in-depth personal interviews of an average of onehour and 14 minutes duration. The interviews were conducted in English, which wasnot a problem for these experts, since these experts were highly educated. Theinterviews were all voice recorded to allow the researcher to transcribe and betteranalyse the results of the in-depth interview (Kvale, 1996; Hannabuss, 1996; Maxwell,2005). The use of telephone or faxed questionnaires and large postal surveys used inquantitative research could not have adequately substituted for the inputs which thepersonal interviews generated using a structured interview with open questions.

The validity, correctness or credibility of an in-depth interview research, consists ofstrategies to identify and rule out the threats that you might be wrong (Maxwell, 2005).A sample of seven organisations is that enough? Are the right experts beinginterviewed? A wide variety of experts were chosen from different disciplines within

Halal, covering food, Islamic banking, economy and standards. Second, the peoplechosen were leaders in their field, which was supported by academic and professionalpublications. Third, the people chosen were willing to share, based on their reputation intheHalalindustry andHalalresearch. Researcher bias is an important threat (Maxwell,2005; Sekaran, 2007), which is caused by lack of trust and rapport, or when the responsesare misinterpreted or distorted, or when the interviewer unintentionally encourages ordiscourages certain responses. To address lack of trust and rapport, six out of ninepersons interviewed were people with whom the researcher has an existing relationshipwith, meaning that the researcher has met several times before at different occasions.Of the other three persons interviewed, one person was from the same university wherethe researcher is conducting his PhD research. Therefore, it can be assumed that there isa natural level of trust and rapport. Before the interview was conducted, a backgroundsearch, consisting of existing publications of the person, were gathered and studied toensure an effective communication during the interview. A structured interview waschosen to ensure that the interviewer was asking the right-open questions and minimisepossible suggested responses by the interviewer. Another threat is that not all dataprovided during the interview is captured and therefore not incorporated in the analysis.To avoid this threat, the researcher voice recorded all in-depth interviews andtranscribed the words said, allowing the researcher to review and analyse the entireinterview at a later stage of the research.

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3. Results3.1 What isHalal from a logistics, supply chain management point of view?Wholesomeness (toyyib) is an important factor and prerequisite of Halal. From theinterviews conducted it clearly follows, thatHalalfor this research inHalalfood supply

chains is clearly defined by the Quran and Sunnah. However, also recognised byMr Darhim Hashim (IHI Alliance Ltd), the Sunnah has different interpretation in thedifferent schools of thought. Another aspect is that the Quran and Sunnah onlyprovide broad principles according Dr Mohamad Akram Laldin (International ShariahResearch Academy for Islamic Finance), which need to be operationalised. Accordingto Dr Mohamad Akram Laldin, the Quranicverses, clearly state that pork and liquorare forbidden from the Islamic point of view, whereas the other area the Quranis silentabout, which is left to the interpretation of the different scholars. However, if there iscontamination between Halal and Haram, the Halal is contaminated and becomenon-Halal. Therefore, aHalalsupply chain should first of all guarantee that there is nocontamination betweenHalaland Haram. As also argued by all persons interviewed,Halalmatters at the point of consumption and therefore the whole supply chain needsto be addressed in order to protect the integrity of a Halalproduct.

3.2 Which Islamic sources are essential forHalal supply chain management?As argued by Dr Ghaffarullah (Universiti Teknologi MARA) Legal Maxims, the generalrules ofFiqh, can provide important principles for Halallogistics and aHalalsupplychain management system. According to Laldin (2006), there are five major maxims:

(1) matters are determined according to intention;

(2) hardship begets facility;

(3) harm should not be inflicted nor reciprocated;

(4) what is certain cannot be removed by doubt; and

(5) custom is arbitrary.

The intention of a Halal supply chain, to protect the Halal integrity, is already animportant justification for aHalalsupply chain management system. Important in thedesign is also not to create unnecessary burden for the consumer and the industry.Second, it is important to address existing customs (like Samak) in the differentcountries that might need to be incorporated in Halalsupply chains. Third, there is asaying of the Prophet (Al-Qaradawi, 2007, p. 33):

The Halal is clear and the Haram is clear. Between the two there are doubtful mattersconcerning which people do not know whether they are Halalor Haram. One who avoidsthem in order to safeguard his religion and his honor is safe, [ . . .]

According to most of the people interviewed, this principle is one of the most importantprinciples forHalallogistics andHalalsupply chains, to avoid aHalalproduct to moveinto a doubtful state. Fourth, Dr Nor Azman (HalalIndustry Development Corporation)referred to an example where the Prophet cursed not only the one who drinksintoxicating drinksbut also the onewho produces them, the one who serves them, the oneto whom they are served, the one to whom the price of them is paid, etc. (Al-Qaradawi,2007, pp. 28, 29). Also Dr Suhaimi Ab. Rahman shared that what leads to aHaram deedis also Haram. From this it could be argued by people that sharing in transport


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and storage with Haram is something, which should be avoided. Fifth, according toDr Mohamad Akram Laldin and Mr Darhim Hashim, mixing Halaland Haram, theHaram will prevail. This means, that theHalalsupply chain should guarantee that thereis no contact with Haram. Sixth, Dr Suhaimi Ab. Rahman (Universiti Putra Malaysia)

furthermore state the analogy of the touching of the dog (where you need to wash yourhands seven times if you hand or the dog hair is wet), could be used, to differentiatebetween dry and wet products in Halalsupply chains.

3.3 Which guidelines and principles are essential for the Halal integrity ofHalalsupplychains?According to Mr Darhim Hashim, it is fundamental to maintain the integrity of theproduct along the supply chain and keep Haram out. Recurring themes with allin-depth interviews, is the cross-contamination ofHalalin direct contact withHaram,the risk ofHalal becoming non-Halal and the importance of the perception of theMuslim consumer. This is shown in Figure 2.

Products that are by definitionHaram are (Regenstein etal., 2003; Kamali, 2010): fleshof swine, blood, carrion and intoxicants. Direct contact (cross-contamination) ofHalalwith these products will make the Halal product non-Halal, and therefore not fit forconsumption by Muslims. Risk is addressing the possibility that somethingHalalmovesin a state of doubt. One of the main functions of aHalalsupply chain management is toavoid that theHalalproduct moves into that state. An important determinant for risk isthe product characteristics:

. wet products have a higher risk as compared to dry products; and

. bulk products have a higher risk than unitised products.

As argued by all people interviewed, the perception of the Muslim is different,depending on the Islamic school of thought, local Fatwas(religious rulings) and local

customs. As mentioned during one of the interviews, Brunei requires even fullsegregation between stunned and non-stunned Halal slaughtered meat.

Figure 2.Foundation ofHalalsupply chain management

Perception

Risk

Direct contact with Haram

Best practice

Precaution

Cross-contamination

Source:Original

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It was evident that the factor perception is very important to be taken intoconsideration for the design of aHalalsupply chain and organising the transportation,storage and handling in order to meet these requirements of consumer markets. Duringthe in-depth interviews, the various guidelines and principles were suggested to protect

the Halal product along the supply chain. Table II summarises the results of thein-depth interviews.

Dependentvariable Islamic sources Independent variable Guidelines and principles

1. Direct contactwithHaram

1. When theHalaland Haramare mixed up, the Haramprevails (legal maxim of

Fiqh) (Kamali, 2008)

Haram product Primary packaging(ofHalalmaterials and notharmful) and tertiarypackaging

2. Of that which intoxicates ina large amount, as smallamount is also haram(Hussaini, 1993, p. 70)

2. Risk The Halalis clear and theHaram is clear. Between thetwo there are doubtfulmatters which should beavoided(Al-Qaradawi, 2007, p. 33)

Productcharacteristics: dry vswet products, bulk vsunitized product

Different load carriers forHalal;Physical segregation of

Halaland najs in storage,transport and handling;Coding and labelling;Supplier selection;traceability; informationsharing; security

3. Perception 1. Custom is arbitrary: practiceshave authority and canspecify a general matter or

restrict an unrestrictedmatter (Laldin, 2006, p. 148)

Market characteristics:different schools ofthought and local

Fatwas

Samak (ritual cleansing);Segregation betweendifferent types ofHalal;

DedicatedHalalfacilities

2. Whatever is conductive to theHaramis in itselfHaram(Al-Qaradawi, 2007, pp. 28-29;Wilson and Liu, 2010, p. 110)

3. Doubtful things are to beavoided (Al-Qaradawi, 2007,p. 32)

4. Hardship begets facility:hardship that surpass thenormal limit and ability toperform (Laldin, 2006, p. 139)

5. Necessity removes

restrictions (Al-Qaradawi,2007, p. 37)

6. If a dog licks a plate (or pot),clean it seven times, of whichone time should be with sand(or earth) (Al-Qaradawi,2007, p. 121)

Source:Original

TabThe application of

in supply manage


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4. ConclusionAlthough the core fundament ofHalalsupply chains is to avoid contact betweenHalalandHaram, the Muslim consumer requires a higher assurance of his Halalfood, whichis based on reducing the risk of contamination and the factor of perception of the

Muslim consumer. Therefore, Halal supply chains can be characterised as robustsupply chains that strive for a lower vulnerability for Halalcontamination.

From the in-depth interviews it followed that the product characteristics (bulk orunitised shipments; ambient or chilled/frozen) have major implication on the design ofHalal food supply chains. From the in-depth interviews it also followed that theperception of the Muslim consumer is an important parameter forHalalsupply chains.This is a complex matter due to the variety of Islamic cultures, Islamic schools ofthought, localFatwasand local customs.

For Halalcertified companies it is important to look beyond their production andingredients, and extend Halal to the entire supply chain in ensuring that theirtransportation, storage and handling are in compliance with Shariah and meet the

requirements of their target Muslim market.Further empirical research is needed to better understand and measure theperception of the Muslim consumer, as perception is a key success factor in an effectivesupply chain management ofHalalproducts. More academic research is also needed inorder to better understand the principles in organisingHalalsupply chains for differentmarkets. Are there differences between the supply chain management requirement, forexample, between Muslim and non-Muslim countries? Finally, there is a need for aHalal supply chain model that is able to describe and optimise Halalsupply chains.This would help the Halalcertified food industry to move towards a supply chainapproach toHalal.

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Corresponding authorMarco Tieman can be contacted at: [email protected]


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