The Concept of Halal Logistics – an Insight

Paper presented at ICLT 2013, Kyoto Japan THE CONCEPT OF HALAL LOGISTICS – AN INSIGHT a b c, Harlina Suzana Jaafar , Emi Normalina Omar , Muhamad Rahimi Osman Nasruddin Faisol a d Senior Lecturer, Malaysia Institute of Transport (MITRANS )and Faculty of Business Management, Universiti Teknologi MARA (UiTM), Shah Alam, 40450 Selangor, Malaysia harlinasj@yahoo.com b Postgraduate Student,Malaysia Institute of Transport (MITRANS) and Faculty of Business Management, Universiti Teknologi MARA(UiTM), Shah Alam, 40450 Selangor, Malaysia c Professor, Academy of Contemporary Islamic Studies (ACIS), Universiti Teknologi MARA(UiTM), Shah Alam, 40450 Selangor, Malaysia d Senior Lecturer Faculty of Architecture, Planning and Surveying, Shah Alam, 40450 Selangor, Malaysia Universiti Teknologi MARA, MALAYSIA Introduction Recently, the market of halal products has received much attention worldwide. Therefore, the demand for halal products is increasing tremendously not only from Muslim countries but also non-Muslim countries. The term of halal logistics has arisen in the logistics industry in Malaysia since 2000, in fact some of the logistics service providers have also offered halal logistics services such as MILS Sdn Bhd and Kontena Nasional Sdn Bhd. Meanwhile, the Malaysian government have also given incentives to the companies that venture into the halal industry. Halal hub, which is a dedicated area in each state in Malaysia, has been designated in assisting the halal products producers to boost the halal industry. In addition, the halalan toyyiban assurance pipeline (HTAP) is the Malaysian standard for halal logistics that cover the warehousing, transportation, and retailing aspects. The component of halal industry can be classified into three areas, namely services, food and nonfood (Ministry of Industrial and Trade, 2006). Therefore, halal logistics is categorized in one of the components, namely the service component. Figure 1. The component of halal industry (Ministry of Industrial and Trade, 2006). Meanwhile, the development of halal industry is not only concentrated in the ASEAN countries such as Thailand, The Philippines, Malaysia, and Brunei, but it has also expanded to the Middle Eastern Paper presented at ICLT 2013, Kyoto Japan countries such as United Arab Emirates, Western countries such as the United States of America, and Europe such as France, which are also really keen in the halal market. Despite the potential growth of the halal industry, the concept of halal logistics is not really understood by the logistics service providers. Therefore, this study is deemed important to develop a conceptual framework and suggest the most feasible terminology for halal logistics. Finally, the paper will discuss the issues and challenges in providing a more concrete and focused concept of halal logistics. Background of the study Understanding the Concept of Halal Halal is an Arabic word that means lawful or permissible. The term halal is used by the religion of Islam to guide Muslims in everyday life. Muslims believe that Allah (The God) is the Creator and Muhammad (The Prophet) is the final Messenger of Allah. Halal refers to all that is permitted and Haram refers to all that is prohibited according to the guidelines given by Allah in the Qur’an and explained (Sunnah) by the Messenger of Allah (PBUH). The Islamic dietary laws are derived primarily from the Qur’an and the Sunnah of the Messenger of Allah (PBUH). The basic principle is that all foods are halal except those prohibited in the Qur’an and the Sunnah. This reflects that no one has an authority to declare halal and haram except Allah. The foods that are not permissible are swine or pork and its by-products, carrion or improperly slaughtered halal animals, animals killed in the name of anyone other than Allah, carnivorous animals with fangs such as lions, dogs, wolves, and tigers, birds of prey such as falcons, eagles or owls, snakes, domesticated donkeys, mules and elephants, pests such as rats and scorpions, insects excluding locusts, blood and blood by-products, alcohol and intoxicants of all kinds, all poisonous plants and poisonous aquatic (unless the poison is removed before consumption), and food which is contaminated with any of the products mentioned above (Lodhi, 2010). In Islam, each of these foods has its own argument of why it is forbidden to the Muslims as Islamic dietary laws strictly adhere to quality, cleanliness, and safety of the food that they consume. Generally, the specific reasons of Haram in Islam are to (1) preserve the purity of the religion, (2) safeguard the Islamic mentality, (3) preserve life, (4) safeguard property, (5) safeguard future generations, and (6) maintain self-respect and integrity (Ahmad, 2008). Nevertheless, recently Muslims realize that the halal concept is not only confined to food as it also includes the process of distribution, handling, packaging, and storage. The concept of halal and also toyyiban as ‘wholesome’ as stipulated in Islam covers nutrition, quality, cleanliness, and safety for everyone and not meant only for the Muslim society which can be practised in food production. For instance, the halal authentication of food products must cover the source of raw materials to the consumers. Accordingly, any activities along the supply chain such as handling, storage, and distribution must be shariah compliant in which halalan toyyiban concept can be applied. Any halal products cannot be mixed with haram products and must be segregated (Jaafar et al., 2011a). This has formed the halal supply chain as significant, broadly accepted, and acquired by the consumers that will also increase the demand for halal logistics among the halal food industry players. In addition, recently consumers are not only concerned on the halal status of the product itself but also the processes that are involved with it. Consumers choose to buy the particular halal products as the products have gone through the halal process. Therefore, the main issue which can be seen today are the issues related to halal logistics, where the industry players do not clearly understand the concept of halal logistics and is frequently being misunderstood by the industry players. For them halal logistics means adding extra cost such as compartmentalizing the warehouse, food segregation according to its nature, and others. Thus, companies will be reluctant to apply for halal logistics and this is will create a barrier to the implementation of halal logistics in the halal food industry. Furthermore, awareness of halal logistics needs to be inculcated and exposed to the industry players and as well as to the public. In 2000, various authors (Arham, 2010; Sandikci & Rice, 2011; Sula, Kartajaya, 2006; Wilson & Liu, 2011; Wilson, 2012) had identified that the Islamic marketing is an innovation in the social science discipline. The Islamic marketing highlights the shariah compliance of the marketing function (Alserhan & Alserhan, 2012), marketing of Islamic brand (Alserhan, 2010) and the need of the Muslim markets (Temporal, 2011). Similarly, halal logistics has also created a new contribution and knowledge to the logistics and supply chain discipline. Paper presented at ICLT 2013, Kyoto Japan Previous studies on halal have looked into the aspects of intention on halal purchase (Shaari & Arifin, 2009), satisfaction towards halal products (Danesh et al., 2010), institutional issue (Othman et al., 2009), quality aspects of food industry (Omar et al., 2008; Talib et al., 2009), traceability in the meat chain (Gellynck et al., 2002), slaughtering influencing product quality (Petracci et al., 2010), and consumption of halal food (Hamlett et al., 2008). Meanwhile, in the area of food research, studies have been done on the effective management of food safety and quality (Manning & Baines, 2004), quality assurances in the food supply chain (Manning et al., 2006), the traceability of data management for food chains (Folinas et al., 2006), and agri-food (Da Xu, 2011; Hobbs & Young, 2000). Halal logistics research focused on information technology (Bahrudin et al., 2011), applying halal in the supply chain management (Tieman, 2011), the integration of supply chain (Nik Muhammad et al., 2009) and halal processed food (Kamaruddin et al., 2012), halal logistics innovation (Jaafar et al., 2011b), human resource (Pahim et al., 2012a, Pahim et al., 2012b), and halal supply chain focusing on food (Omar & Jaafar, 2011). As a result, this research differs from other studies on halal and food chain which have been identified previously. From the publications that have been reviewed from 2004 until 2013 (Table 1), only 11 publications have been published based on the main theme of halal logistics. Since there are not many academic journals in the area of halal logistics, this paper goes further into publications which emphasize on halal supply chain. Therefore, these concepts need to be explored further in other types of publications including theses, proceedings, and other published articles. This is important to address the confusion of terminologies, concept, and practices of halal logistics. Indeed, it is shown that due to limited publication in the area of halal logistics, it has been revealed that the area of halal logistics and supply chain largely contributes to the gap and adds to the body of knowledge through the knowledge advancement in the logistics and supply chain discipline. In addition, several authors consider Islamic marketing as an innovation in the social science discipline (Arham, 2010; Sandikci & Rice, 2011; Sula and & Kartajaya, 2006; Wilson, 2012). This has also created a new contribution to the logistics and supply chain discipline. Table 1 The Number of Publication Reviewed Based on the Area of Halal Logistics and Halal Supply Chain 2004 - 2013 Types of publication Journal Proceeding Total Halal Logistics 5 6 11 Halal Supply Chain 6 3 9 Since research on halal logistics is practically lacking, therefore, most concepts are borrowed from the logistics literature and the Islamic law will be applied to the logistics discipline. Although the concepts of logistics and halal are overlapping, it does not appear to be many interactions between the Islamic and logistics researchers exploring this topic. Tieman and Ghazali (2013) also highlighted the role of purchasing in the halal food supply chain and the value chain has been largely understudied and poorly understood. Due to the above reason, Mohamed Amin (2010) had has stressed that the areas of growth or potential opportunities in freight logistics will be halal logistics, contract logistics, and reverse logistics. Thus, halal logistics is also one of the components on the Malaysia Logistics Council Agenda 2010. Indeed, there are various initiatives done by the Malaysian government in order to turn out Malaysia to be a global halal hub such as stated in the Tenth Malaysia Plan, Third National Agricultural Policy (1998-2010), Small and Medium Industries Development Plan (2001-2005), Ninth Malaysia Plan (2006-2010), and the Third Industrial Master Plan (2006-2020). Thus, this paper integrates the logistics and halal area of discipline, namely halal logistics. Halal logistics include the physical activities of storing and transporting, which provide a set of data for communication and management between successive links (up and down) along the food supply chain (Kamaruddin, Iberahim, & Shabudin, 2012) and apply the shariah concept along the chain. On the other hand, the basic principal of halal logistics is to ensure the segregation of halal cargo from non-halal cargo. This is to avoid cross-contamination and ensure that the logistics system is aligned to Paper presented at ICLT 2013, Kyoto Japan the expectations of Muslim consumers and the halal integrity is thus protected along the whole supply chain (Ministry of Industrial and Trade, 2006). Hence, the most feasible terminology for halal logistics is the application of shariah law to the logistics process. Starting from the beginning of the logistics process until the final consumers, the shariah law must be followed. This is to ensure the halal product that is halal must also go along the halal logistics and in ensuring the halal logistics, the halal integrity among the channel members must be applied. This will include proper segregation and proper logistics system of the products throughout the logistics process. Halal logistics could be referred to the application of the halalan toyyiban principles along the supply chain activities, which means that all the activities ranging from the source of supply, storage, transportation, manufacturing, handling, and distributing should adhere to the concept of halalan toyyiban as underlined by Islamic law. This means that the halal products should not be mixed with the non-halal products throughout the logistics activity to ensure that the halal status of a product could be maintained. As a result, figure 2 envisages the proposed conceptual framework of the halal logistics. Proper Segregation Halal Integrity Halal Logistics Halal Integrity Proper Logistics System Figure 2. Proposed conceptual framework of the halal logistics Moreover, halalan toyyiban supply chain is the concept of applying syariah principles in the supply chain management. The concept of halalan toyyiban along the supply chain will begin from the sourcing aspect to the point of consumption. In the halalan toyyiban supply chain activities, all aspect of halal and toyyib must be deliberated (everything must be halal and toyyib) in order to ensure final consumers will be getting halalan toyyiban products.Indeed, halal logistics is part of supply chain in order to ensure the whole concept to be realized, halalan toyyiban supply chain supply chain would be the most feasible term compare to halal logistics. In applying the halal logistics or halalan toyyiban supply chain concept become realize various issues and challenges will be facing by the industry players, consumers and the government. Issues and Challenges In ensuring the implementation of halal logistics, the logistics players, consumers, and government will be facing various issues and challenges such as the following: 1. The legal status of halal and the protection of halal status are always unclear in the logistics activities. Therefore, it is difficult for the Muslims to ensure the integrity of the halal products. 2. Not many industry players are really keen to practise the halal logistics due to incurred additional cost in the logistics. Thus, the expected standard of halal is not practised by the industry players as well as food industry players. 3. About 90 per cent of halal products are being produced in non-Muslim countries; therefore, the halal status and halal logistics of the halal products are uncertain. This is because halal products are a lucrative market to the industry players. Paper presented at ICLT 2013, Kyoto Japan 4. There are not many experts in the halal logistics and therefore the training for halal logistics is important to the employees that are involved in handling halal products. The three dimensions that have been highlighted by Pahim, Jemali, and Mohamad (2012) as important in the need for training in halal logistics are people, demand, and level of awareness. 5. The traceability of halal products is deemed important in ensuring the status of halal products during the process of halal logistics. Conclusion This paper develops a conceptual model that takes into consideration the halal and logistics aspects. Notwithstanding lots of research and review from the literature and problems being identified in the industry, more studies still need to be done on the logistics industry of developing countries, particularly Malaysia. Prior studies which have been carried out in other countries can be used as a parameter in establishing the halal logistics industry. The concept of halal can be applied to all and not meant for Muslims only. Therefore, when there is a need for halal products definitely it means creating new and more business for producers, suppliers, and others. The need is to evaluate whether the existing process is already halal whereas consumers are unaware of it. In case it is considered as halal, then the information needs to be disseminated to the consumers. In conclusion, the logistics players who want to venture into the new area as well as sustaining in the market are recommended to offer halal logistics services. This is to capture the new demand from the consumers towards the halal products that goes along the halal logistics in ensuring that only halal products with halal logistics will be accepted by the consumers worldwide. Currently, the concept of halal logistics which has been implemented by existing logistics players has increased the attention of the consumers especially from the Middle Eastern countries. Due to the reason, it is has been suggested to the logistics providers to invest more in the halal logistics as it is a worthwhile investment. Therefore, it is recommended that proper strategies for the halal logistics need to be developed for use by the global halal industry. Acknowledgement The authors would like to express their appreciation to the Malaysia Logistics Council and the Malaysia Research Centre for Logistics and Supply Chain (MaRCeLS) at MITRANS for supporting the research and the Ministry of Higher Education for the research grant. References Alserhan, B. A. (2010). On Islamic branding: Brands as good deeds. Journal of Islamic Marketing, 1(2), 101–106. doi:10.1108/17590831011055842 Alserhan, B. A., & Alserhan, Z. A. (2012). Researching Muslim consumers: Do they represent the fourth-billion consumer segment? Journal of Islamic Marketing, 3(2), 121–138. doi:10.1108/17590831211232546 Arham, M. (2010). Islamic perspectives on marketing. 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