Proposing the Conceptual Framework of Halal Food Supply Chain

Integrity for Indonesia

M. Syafii, Weni Hawariyuni, and Monika Andrasari

Faculty of Economic and Business, Universitas Sumatera Utara, Medan, Indonesia

Keywords : Halal Food, Halal Supply Chain, Job Opportunity, Unemployment, Indonesia

Abstract: The demand for halal food consumption is increasing annually as a result of the rising number of Muslim

population globally, which is approximately 1.8 billion. In 2010, the halal market constituted about 16 per

cent of the world food trade in which the trade value around RM 1,628,.60 billion (US$ 547 billion) for global

halal market. The trend of global halal market creating attention for all of countries in the world whether

Muslim or non-Muslim countries to generate more halal producers. The global halal market is growing. The

halal food market is currently worth 16% of the total global food industry and could report for 20% of world

trade in food products in the future. Asia, Africa, and Europe report for respectively 63%, 24%, and 10% of

the international market. An increased number of consumers ask for food products that meet the terms with

Islamic law, like food products that do not contain pork or that hold ritually slaughtered meat. Account for

the total number of Muslim worldwide at 1.62 billion heads, representing 23.4% of an anticipated 2010 world

population of 6.9 billion. Europe has a Muslim populace of approximately 44.1 million Muslims, which

consist about 2.7% of its total population (Grim & Karim, 2011). The aim of this study is to propose the

conceptual framework of halal meat supply chain integrity for Indonesia by focusing issues and challenges.

As we know that the trend of demand for halal products increases from year to year. Halal supply chain is

part of halal system and it is expected that halal supply chain can provide job opportunity for unemployment

in Indonesia. Thus, it will reduce poverty and boosting economic growth in Indonesia.

1 INTRODUCTION: THE

DEVELOPMENT OF GLOBAL

HALAL MARKET

As number of Muslim populations is raising around

1.8 billion in the world, it led increasing as well the

demand for halal products, particularly for halal food

and beverages. According to Van der Spiegel et al

(2012) that the halal food market reached about 16 per

cent from the total of worldwide food trade. He

further argued that the demand for halal products

increased about 63 per cent, 24 per cent, and 10% in

Asia, Africa, and Europe respectively. Meanwhile,

Emi et al (2011) pointed that the halal food industry

succeeded to reach around RM1,628.60 billion

(US$547 billion) in the global halal industry.

Subsequently, it invites numerous global food

producers whether Muslim or non-Muslim to produce

more halal products, particularly halal food and

beverages. Nowadays, halal industry also gave other

opportunities to other industries areas such as halal

pharmaceuticals, halal cosmetics, Muslim friendly

tourism or Syariah tourism, and Muslim fashion

(Kaiser, 2016).

Roslan et al (2016) pointed out that there are

increasing of Muslim consumers requested to

producers to come up with the production based on

shariáh law. It means that those products are free from

pork, liquor, or slaughtered based on Islamic law.

Further, they demonstrated that European recently

concentrated on investment of global food industry.

Some European sellers follow Islamic law in

endorsing their fresh halal meat as they export their

meat products to the Muslim countries. Netherlands

is chosen as the main centre for halal market in

European countries. In this regard, Netherlands will

distribute the halal meat within European countries. It

is also noted as the first country in the world which

give facilities for halal storage and warehousing in the

world and led the birth of halal supply chain. As the

demand for halal food, including meat increase, it

makes Muslim people realized that they need to make

sure that the whole process of food production should

Syaﬁi, M., Hawariyuni, W. and Andrasari, M.

Proposing the Conceptual Framework of Halal Food Supply Chain Integrity for Indonesia.

DOI: 10.5220/0009259404930497

In Proceedings of the 2nd Economics and Business International Conference (EBIC 2019) - Economics and Business in Industrial Revolution 4.0, pages 493-497

ISBN: 978-989-758-498-5

493

be based on shariáh law. Thus, Tieman (2011) noted

that the halal supply chain is very important to

convince Muslim consumers the halal integrity of

consumption.

Further Tieman (2013) also argued that the

government and industries also should focusing on

the importance of halal supply chain integrity. He

further mentioned four reasons to come up with the

importance of halal supply chain integrity. First, halal

integrity issues are more likely to occur than before

due to increasing complexity of supply chains.

Second, the complexity of today’s supply chain with

a high percentage of imported ingredients is making

integrity issues harder to detect. Third, halal integrity

issues once detected go viral on the internet, exposing

the integrity of a country’s halal system and the brand

owner concerned. The aim of these reasons is to

assure Muslim consumers that they consume the

food, including meat are exempted from pork, liquor,

and other forbidden things.

Other issues related with the halal supply chain

integrity are including food ingredients, food

cleanliness, and halal food may mixing with non-

halal food in terms of storage and distribution,

warehouse. Recently, Muslim people also aware with

the issues of poultry and meat slaughtering that does

not comply with the shari’ah principles or shariáh

law.

The aim of this study is to propose the conceptual

framework of halal meat supply chain integrity for

Indonesia case study. At the same time, this study also

concentrates on issues and challenges in applying

halal meat supply chain integrity in Indonesia. As we

know that the trend of demand for halal products

increases from year to year. Halal supply chain is part

of halal system and it is expected that halal supply

chain can provide job opportunity for unemployment

in Indonesia. Thus, it will reduce poverty and

boosting economic growth in Indonesia.

2 UNDERSTANDING ON THE

CONCEPT OF HALAL, HALAL

SUPPLY CHAIN, HALAL

SUPPLY CHAIN INTEGRITY

Zulfakar et al (2011) stated that halal means legal,

permissible and no prevention of doing those

activities and must be based on Islamic law. Further,

Nurul huda et al (2009) argued that halal related with

the concept of permissible based on Islamic law. They

also added the concept of Thoyyiban (wholesome).

Thoyyiban can be defined as the finest quality, safety,

hygiene, healthful, and genuine. In the meantime,

Noorsiah et al (2016) defined halal concept as the

term which is not only focusing on food and drinks,

but also covering the daily activities as a Muslim. The

label of halal and haram refers to lawful and unlawful

based on shariáh law. Shariáh law referring to a moral

system which guides the Muslim daily life in terms of

food and beverages, hygiene, family, politics,

banking and business. The Islamic religion also

concentrates on cleanliness (toyyiban) in terms of

spiritually, physically, mentally, and health. Noorsiah

et al (2016) stated that halal management governs not

only for food production or manufacturing but halal

management also covers sourcing or origin of raw

materials (halalness), movements, transportation and

distribution processes from the upstream (origin) and

downstream to the market (end users) that involves

transporters, containers, modes by road, air or sea, the

warehouse and distribution centres owners and

operators and their operations; the wholesalers and

retailers and their business to the end in the

hypermarket, supermarkets and small retail outlet

services must be halal compliance. Due to these

reasons, we have the concept of halal supply chain

which has the purpose to make sure all of the products

free from forbidden things.

Supply chain management is part of production

activities that covering warehouse, storage,

containers and distribution. Zulfakar et al (2011)

stated that supply chain management (SCM) is kind

of management activities held by supply chain

players which is focuses on production,

transportation, location, and transportation with the

aim to reach the greatest combination of

responsiveness and competence for the market

served. Recently, as the awareness of Muslim people

on halal product growing, particularly on halal food

and beverages, it led the birth of halal supply chain.

The halal supply chain applied to convince that all the

products consumed are exempted from the unlawful

things. Zulfakar et al (2011) mentioned that halal food

supply chain composed of three procedures namely

planning, implementing, and controlling the flow of

upstream (origin) until to the market (end users). At

the same time, all the procedures involving in halal

supply chain activities must be halal certified. In other

words, halal supply chain is kind of management

activities involving the process of procurement,

movement, storage, and controlling products via the

organization and the supply chain must be halal

certified following the shariáh law.

In the discussion of halal supply chain, we also

need to know about the importance of integrity to

make sure that all procedures from origin until end

EBIC 2019 - Economics and Business International Conference 2019

494

users are not contaminated with forbidden things.

Integrity can be defined as part of truthful, having

good manner, righteousness, solidarity, consistency,

unity, good moral value, and trustworthiness

(Noorsiah et al, 2016). Thus, the concept of halal

integrity for halal meat supply chain means that to

support the processing of halal meat and cargo, and to

uphold the toyyib in terms of the meat handled and

processed through the halal supply chain network

including transportation, warehouse, and storage and

delivered to the end of consumers; and the people

employed during this halal meat supply chain

procedures are the trusted people who do their

operation based on Islamic law. In the meantime,

Tieman (2013) promoted the system of segregation

and communication for the system of halal integrity

supply chain. The segregation process is needed to

assure that the process of production till distribute to

the end users are exempted from forbidden things

based on Islamic law. This segregation process which

is implemented on transportation; stowage in sea, air,

and inland terminals with the purpose to separate the

halal and non-halal products.

3 PROPOSING CONCEPTUAL

FRAMEWORK OF HALAL

FOOD SUPPLY CHAIN

INTEGRITY FOR INDONESIA

In this regard, this study aims to propose the

conceptual framework of halal food supply chain

integrity for Indonesia in figure 1. There are various

steps in deriving the conceptual framework started

from the process of halal animal feed, halal

slaughtering process, halal logistics, halal

traceability, halal assurance system (halal standard

and certification), trust and commitments, and lastly

is the importance of role of government.

3.1 Halal Animal Feed

Halal animal feed is one of the vital roles in ensuring

that the products consumed is exempted from the

forbidden things. The Government of Malaysia had

issued the Malaysian Standard MS1500:2004 to

promote that the people have to feed animal

consumed by Muslim people such as cow, sheep,

chicken, fish with halal food, and not contain pork

enzyme. Furthermore, ingredients of the food must be

exempted from any genetic modified organism from

non-halal animals (Emi et al, 2011). Thus, the food

for animal required to utilize vegetable or organic

food. In terms of medication, the animal also has to

consume the medicine and nutritional which not

contain harmful things. The purpose is to make sure

that the Muslim people consume animals exempted

from the forbidden things.

Figure 1 Conceptual framework of halalfFood supply chain

integrity for Indonesia

3.2 Halal Slaughtering Process

In terms of slaughtering process, the procedure of

slaughtering must follow the Syariah rules and

regulation. The procedures of slaughtering have to

make sure that the people who slaughtered must be a

Muslim, and must use a sharp knife to slaughter those

animals. Further, they have recite Tasmiyyah and

must be followed by the owner of abbatoir. Lastly, the

owner of abbatoir have to focus as well on the

cleanliness and hygienes of abbatoir.

3.3 Halal Logistics

Logistics can be defined as the process of planning,

implementing and controlling the efficient, effective

flow and storage of goods, services and associated

information from the point of origin to the point of

consumption for the function of conforming to

customer requirements (Roslan et al, 2016). They

further said that the purpose of halal logistics is to

ensure that Muslim consumers can consume the foods

and beverages in the good condition. In this regard,

Logistics management involving series of activities

including conveyance, stowage, storeroom, stock or

supply management, substance management, product

arrangement, and customer service.

3.4 Halal Traceability

This study employs the traceability with the purpose

to trace the status of halal of every stage in terms of

Proposing the Conceptual Framework of Halal Food Supply Chain Integrity for Indonesia

495

food production process. The purpose of the

traceability is to ensure that every level of food

production process not contaminated the harm things

based on Islamic law. The traceability concept also

present information related the food undertaking

process from the initial until end level of production,

particularly concentrating on food ingredients.

Zulfakar et al (2012) argued that the traceability

process could help us to fully control the halal food

supply chain by offering transparency information

and intensify the halal integrity.

3.5 Halal Assurance System

According to Zulfakar et al (2011) Halal assurance

system means that providing halal certification and

halal standard to encourage the halal food supply

chain integrity. The purpose of halal standard is to

make sure that every player in halal industry must

follow the halal standard determined by Islamic

council in their country. So far, there are no halal

standardized internationally due to every country

come up with their own halal standard, including

Indonesia and Malaysia. Meanwhile, halal

certification means that the documents which stated

that the products had fulfilled the Islamic

requirements procedures and proven halal by Islamic

council in it’s country. MUI (Majelis Ulama

Indonesia/Indonesia’s Islamic Council) is the Islamic

body which has authority to issue halal certificate in

Indonesia.

3.6 Trust and Commitments

Trust and commitments are interconnected each other

in creating halal food supply chain integrity. Muslim

consumers buy halal food and beverages from halal

shops due to trusting on them. They trust on Muslim

sellers as they are Muslim who follow Islamic rules.

Muslim consumers build trust on Muslim sellers as

they sell halal products following Islamic law. Trust

in halal supply chain integrity based on halal logo or

halal certification provided by every Islamic council

in every country in the world. Muslim also can

purchase products from non-Muslim shops as long as

they put halal logo in their shops. This halal logo or

halal certification inform indirectly to Muslim buyers

that the sellers or producers already fulfilled the

Islamic requirements based on Islamic law. In terms

of commitments means that all of the parties involved

in halal food supply chain integrity must commit to

make sure initial production until end of production

are exempted from forbidden things.

3.7 Role of Government

The role of government is very crucial in the halal

food supply chain integrity. So far, Indonesia’s

government collaborate with Indonesia’s Islamic

Council (Majelis Ulama Indonesia) in providing

public agencies and training professional auditors to

make sure that the industry players in the area of

tourism, food and beverages, and others. Supporting

from government and MUI can detect the fake halal

logo or halal certification and give awareness the

importance of halal for Muslim people. Halal not only

focusing on forbidden things, but halal also

concentrating on cleanliness and hygiene.

4 CONCLUSION

Halal integrity plays important role in supporting

halal products. This study proposing the conceptual

framework of halal food supply chain integrity for

Indonesia. The conceptual framework composed of

several procedures started from the initial until final

steps. It covers halal animal feed, halal slaughtering

process, halal logistics, halal traceability, halal

assurance system (halal standard and halal

certification), trust and commitments, and role of

government. This study expect that the conceptual

framework of halal food supply chain integrity can be

used for industry players in the field of tourism, food

and beverages, and others.

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