Missing Part of Halal Supply Chain Management

Missing Part of Halal Supply Chain Management

Ratih Hendayani (Telkom University, Indonesia) and Yudi Fernando (Universiti Malaysia Pahang, Malaysia)
DOI: 10.4018/978-1-5225-2255-3.ch474
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Abstract

The increasing Halal product demand in the world made the Halal product industry should make sure all companies operation especially companies supply chain could guarantee product Halalness, so companies supply chain should comply Shariah or Islamic law. Some research about Halal supply chain already publish and give various perspectives about this topic. But unfortunately, there are one important thing that not discuss in previous research about Halal supply chain, the one important things is Islamic financial system that actually can support operation of Halal supply chain because based on the Islamic financial concept, the Halal supply chain can be not Halal or barakah if the supply chain financing not also comply with the Islamic law. For the integrated Halal supply chain, need included the Islamic Financial system, and this chapter will discuss Islamic financial that include in the Halal supply chain such as a Halal fund for the supply chain cost and Halal Financial flow. And bring a new perspective and definition of Halal supply chain management.
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Introduction

The awareness about halal products in the world, especially about halal foods, is increasing. Not only 1.57 billion Muslims in the world spreading over 57 Islamic countries (Halal Trade Globally, 2015), but many non-Muslims also regard halal products, halal foods especially, as a trend of a healthy lifestyle. This is an opportunity for certified halal foods manufacturers to make their halal products as a competitive advantage, of which the other food companies do not possess. Regarding the production processes, the label “halal foods” must not be a mere proclamation made by the manufacturers. Halal food producers must start managing their supply chain, particularly to decide and inspect on where they obtain the raw halal material and to ensure the optimal cleanliness and hygiene in the distribution, to ascertain that the raw materials or processed foods are free of contamination which may cause the products to become not halal. In fact, according to Zulfakar et al. (2014), with the complexity of the food trade in the world, especially in terms of distributing halal products throughout the world, consumers of halal food products are still not sure whether the products produced are completely in accordance with the principles of halal or the Sharia laws, whether or not the food is contaminated when distributed to the whole world.

To avoid problems of distribution with a long peak time, according to Omar and Jafar (2011), the company needs to ensure all supply chain networks comply with halal procedures in the entire supply chain globally. Currently, the market for halal products is widely distributed throughout the world. This leads to increased demand for halal products, not only from the Islamic countries but also from the non-Muslims. Hence the demand for halal products not only from Muslims but also from the others, causes halal products to become globally renowned. This phenomenon stresses the need for the halal supply chain. Supply chain on halal products, especially halal foods, means that every process and partner in the supply chain should be able to maintain the halal status of food products so that they can be guaranteed to be absolutely halal by the laws.

Given the importance of managing supply chains in halal products, many studies have discussed halal supply chain managements, such as in Tieman (2011), Tieman (2015), Alqudsi (2014), Zulfakar et al. (2014), Zulfakar (2011), Zailani et al. (2010), Ngah et al. (2014), Tieman et al. (2012); Aziz and Sulaiman (2014), Talib et al. (2013); Muhammad et al. (2009); Zailani et al. (2015), and there are still some other studies which are more focused on supply chain managements for halal foods. In addition, not all of these studies discuss halal supply chain management as a whole thus they are unable to capture the complexity of halal supply chain itself. Some just take the perspective of the consumer or distribution or simply in terms of the logistics of its course. The studies that discuss halal supply chain managements still have shortcomings in translating the overall supply chain management and supply chain management to separate its role in logistics management. In gaining integrated halal products, logistics management is part of the supply chain management. Companies should be able to implement the concept of halal in the whole value chain system such as in procurement phase, processing, packaging, labeling, transporting, finance and logistics of food with the complete process. Unfortunately, the concept of halal logistics lacks focus and it is not enhanced by other following researchers who discuss halal supply chain managements so that there is still a lost concept on halal supply chain management (Kamaruddin et al., 2012). The lost concept is discussed in other studies, namely finance.

Key Terms in this Chapter

Halal: Every things that allowed by the Islam laws.

Supply Chain Flow: (2013) The flow of information, products, funds, between supply chains to improve the supply chain advantages. AU63: Could not find a publisher location in a book reference (in reference "Supply Chain Management, 2011").

Islamic Financing: According to Catherine (2015) AU61: The in-text citation "Catherine (2015)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. the underlying principles governing Islamic finance mutually-risk and profit sharing between parties, guarantees of justice based on standards of Sharia compliance checks underlying Sharia-based business activities and assets. This encourages entrepreneurship, trade and commerce, but prohibit activities that involve “Riba” (interest), “Maisir” (gambling) and “Gharar” (speculative trading). There is a consensus among all Islamic law prohibits business operations involving interest and gambling, and they are in the production, distribution, promotion and sale of goods or services of non-Halal as alcohol and pork, and entertainment facilities immoral such as brothels, pubs, massage parlors and discotheques. AU62: Could not find a publisher location in a book reference (in reference "Supply Chain Flow, 2013").

Halal Supply Chain: Planning and supply chain management ranging from Sharia procurement, distribution Sharia, processing of Halal products through the logistics Halal, Halal certification process, maintenance of Halal products, and Halal certification by monitoring the flow of Halal products, information-based Islamic, and Halal finance involves cooperation among supply chain actors who have good cooperation with the principles of Islamic cooperation.

Supply Chain Management: (2011) A set of integrated activities to manage upstream and downstream relationships with suppliers, manufacturers, distributors, retailers and customers in order to deliver superior customer value at lesser cost, efficient, and effective distribution, purchasing and procurement, and other supply chain activities with a continuous flow of information and to deliver customer service and gaining competitiveness. Verma and Seth.

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