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Halal supply chain management is becoming important for consumer confidence in halal certified products. However, halal supply chains are complex supply chains with vulnerabilities that need to be addressed through well organised robust, effective and efficient halal supply chains. This paper sets out to argue that new innovative solutions are needed for better optimisation of halal supply chains that exploit collaboration, both vertically with supply chain partners and horizontally among companies in the same industry. Methods in vertical collaboration proposed are halal clusters and a halal supply chain orchestrator. Possible methods in horizontal collaboration are direct collaboration models and collaboration through an intermediary. Governments are recommended to stimulate vertical and horizontal collaboration initiatives in the halal industry and the development of a more advanced halal standard, incorporating international halal standards, which support a supply chain approach to halal. Industry pilots and case study research are needed to test the various collaboration concepts and provide practical solutions for the halal industry to optimise international halal supply chains.
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Dr. Marco Tieman (CEO LBB International & Adjunct Professor Universiti Tun Abdul
Razak)
Kuala Lumpur, 25 August 2014
Synergy in Halal Supply Chains
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This presentation is based on the article ‘Synergy in Halal Supply Chains’, published in the journal ‘Islam and Civilisational Renewal’ in July 2014.
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Agenda
IntroductionIntroduction
Vertical CollaborationVertical Collaboration
Horizontal CollaborationHorizontal Collaboration
ConclusionConclusion
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Introduction
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Integrity of halal supply chains is becoming an increasing concern for governments and industries due to: 1)halal integrity issues are more likely to occur than before2)Halal integrity issues are harder to detect3)Once detected go viral on the internet, exposing the integrity of country’s halal systems and corporate brands
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The neglect of halal requirements throughout the entire supply chain is gradually weakening consumer confidence in halal certified products!
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Muslim Company
Muslim Company
Halal Product
Halal Product
Halal Supply Chain
Halal Supply Chain
Halal Value Chain
Halal Value Chain
11 22 33 44
Sou
rce:
Tie
man
(20
11)
Evolution of halal
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The halal industry has not widely implemented halal logistics standards, as halal certification bodies have not extended halal requirements toward the supply chain.
This has resulted in a halal industry where food safety (tayyib) requirements receive a ‘supply chain approach’ and halal requirements only a ‘product approach’!
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As the holy Qur’an (2:168) puts halal and tayyib at equal footing, it would be logic to extend halal assurance toward the supply chain!
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Vertical and horizontal collaboration are important tools to organise halal supply chains that are robust, effective and efficient!
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Vertical Collaboration
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A supply chain is a network of parties that link the source to the point of consumer purchase.
Supply chains
Sou
rce:
Lam
bert
& C
oope
r (2
000)
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The horizontal supply chain structure refers to the number of tiers across the supply chain [short vs. long].
The vertical supply chain structure refers to the number of suppliers/customers represented within each tier [narrow vs. wide] (Lambert & Cooper, 2000).
Supply chains
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Effective vertical collaboration of halal supply chains can be achieved through (1) halal clusters and (2) halal supply chain orchestrators.
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Halal clusters are spatial clustering of halal production chains (food, cosmetics, pharmaceutical manufacturing) in an industrial park or economic zone, whereby a significant part of the supply chain is geographically positioned in a halal cluster.
Halal clusters
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1)Logistical advantages (shorter transportation times)2)Optimal use of by-products3)Increase capacity of cluster participants and innovative growth4)Stimulate new business formation that support innovation and expand the halal cluster.
Halal clusters
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Today there are halal park initiatives in Brunei (Bio-Innovation Corridor), China (Qinzhou), Malaysia (21 halal parks), and the United Kingdom (Birmingham and Norfolk).
Halal clusters
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The halal supply chain orchestrator manages global halal supply chains according to the specification of the designation market and ensures that the integrity is maintained throughout the halal network.
He makes use of common halal distribution centres, consolidation of transportation and innovative logistics concepts (Tieman, 2012).
Halal supply chain orchestrator
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The role of the halal supply chain orchestrator can be fulfilled by a fourth-party logistics service provider (4PL): an integrator that assembles the resources, planning capacity, and technology of its own organisation and other organisations to design, build, and run comprehensive supply chain solutions.
Halal supply chain orchestrator
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1)Effective halal supply chain assurance: reference to one international halal logistics standard (e.g. IHIAS 0100:2010) and consistent communication of halal status (‘halal supply chain’ code) throughout the supply chain2)Standardisation of halal assets in the supply chain: from source to point of consumer purchase3)Supply chain optimisation: sharing demand data, reducing inventories, and better transport planning
Vertical collaboration allows for:
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Horizontal Collaboration
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Collaboration between companies in the same industry, horizontal collaboration, can be facilitated through (1) direct collaboration between different companies or via an (2) intermediary.
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1)Dominant industry player, where smaller players can use their halal assets or supplier contract2)Transportation is facilitated by company A, Warehousing by company B, and cargo boxes by company C3)Collaboration on project basis, for example: Hajj season and humanitarian aid4)Intensive collaboration on continuous basis, where many activities are done jointly together
Direct collaboration forms
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An intermediary is able to consolidate halal goods flows for different companies that need domestic road transportation, cross border transport, air shipments, sea shipments, warehousing, and value added logistics.
In here various companies can make use of the expertise of, global network of and ability to consolidate halal flows by this halal logistics service provider.
Intermediary
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1)Sharing of information: ‘halal supply chain’ code, best practices in halal supply chain and value chain, and halal specifications [machine slaughter: yes/no; stunning: yes/no]2)Pooling of resources: outsourcing to a common (halal certified or compliant) logistics service provider, efforts, halal assets3)Bundling of halal volumes: reducing transportation costs, improved segregation conditions
Horizontal collaboration allows for:
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Conclusion and Recommendations
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The application of vertical and horizontal collaboration concepts provide better control of halal supply chain from source to point of consumer purchase and increase the confidence of the consumer in halal certified products.
These collaboration concepts require a more advanced halal certification system (beyond product certification), expanding halal regulation along the supply chain. This should reduce the exposure of a country’s halal system and brand owners.
LBB InternationalB-5-8 Plaza Mont Kiara
Mont Kiara50480 Kuala Lumpur
Malaysia
Dr. Marco TiemanChief Executive Officer
halalsupplychainmanagement.blogspot.com
Thank you
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Lambert, D.M., & Cooper, M.C. (2000). Issues in supply chain management. Industrial marketing management, 29(1), 65-83.
Tieman, M. (2011). The application of halal in supply chain management: in-depth Interviews. Journal of Islamic Marketing,2(2), 186 – 195.
Tieman, M. (2012). Control of halal food chains. Islam and Civilisational Renewal, 3(3), 538-542.
References
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IHI Alliance (2010), ICCI-IHI Alliance Halal Standard: Logistics – IHIAS 0100:2010 [first Edition], Kuala Lumpur: International Halal Integrity Alliance.
Tieman, M., Vorst, J.G.A.J. van der, & Ghazali, M.C. (2012). Principles in halal supply chain management. Journal of Islamic Marketing, 3(3), 217-243.
Tieman, M. (2014). Synergy in Halal Supply Chains. Islam and Civilisational Renewal, 5(3), 454-459.
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