The Value and Advantage of Halal Logistics - hdc

The Value and Advantage ofHalal LogisticsHalal Logistics Conference 201228 June 2012Traders Hotel, Penang1

1About MITRANS2Introduction & Definition of Halal Logistics34Understanding the Concept of Halal Logistics Throughout the SupplyChain ProcessThe Importance of Halal Logistics5Road to Halal Logistics: The Way ForwardMaterial for Training Purposes Only 2

History of MITRANS2012 – MITRANS participated in variouscorporate tenders for transport andlogistics projectsSeptember 2011 – Halal TrainingProgramme for KLAS Kargo formulatedand audited by MOHE2009 – MOHE MLC Research grant throughMOHE - RM5 m plus annual grant of RM 1 muntil 20152005 – Internationalization - MITRANSEU Asia Link Project TRANSLINK2003 – Upgraded to a full institutenamed MITRANS1996 – MacTRANS placed directly underITM’s Director’s OfficeJuly 2011 M.Sc and Ph.D programmescode (LT) approved.May 2011 – Halal Logistics trainingprogramme for JAKIM auditors1982 – Pusat Pengajian PengangkutanMalaysia (PPPM) was established.Material for Training Purposes Only 31982 2006 Current

VISIONTo become a leading institute intransportation and logisticsknowledge.MISSIONTo serve as a professional centre of excellence instrategic transportation and logistics planning anddevelopment.Material for Training Purposes Only 4

MITRANS ObjectiveThe Malaysia Institute of Transport (MITRANS) at UniversitiTeknologi MARA (UiTM) is the nation’s centre for transportationresearch, logistics planning, consultancy and training. MITRANS has astrong history of research excellence in the fields of transport andlogistics and supply chain, maritime, urban and rural transportation,intelligent transport systems, highway and traffic engineering. Buildingon UiTM’s breadth of scholarship and entrepreneurial heritage, weare engaged in multidisciplinary research, consultancy and training thataddresses real world challenges in the transportation industry todayMaterial for Training Purposes Only 5

The Principles of Halalan ToyyibanTo uphold the Halal integrity of goods across thesupply chain from farm to forkTo avoid cross contamination between goods handleTo ensure products are safe for consumption6

Halal LogisticsHalal logistics is the process of managing the procurement, movement,storage and handling of materials, parts livestock and (semi) finishedinventory both food and non-food (and related information &documentation flows) through the organization and the supply chain incompliance with the general principles of Shariah Law.The main objective of Halal Logistics is to ensure the Halal Integrity ofHalal products for the end-consumer. Halal Logistics can be defined as:"The Command & Control of goods flows in a value system in such asway that the Halal integrity is secured throughout the supply chain.“Knowledge on Halal Logistics is important in establishing a Halalcompliant supply chain by design.7

Areas of Halal LogisticsHalal LogisticsHubHalal LogisticsTransportHalal LogisticsRouteHalal LogisticsManagementDedicated storage /warehouse in assistingdistribution frommanufacturer to globalcustomerDedicated liner / transportfor halal products to avoidcross contaminationduring transportationDedicated route inlinking supplier to thecustomer for fasterturnaroundSupervise all aspects ofhalal supply chain ofmanufacturer ordistributor and act assolution & informationservice provider8

The Halal Value ChainProductionProcessing &Packaging Storage RetailHalal Logistics ManagementCONSUMER9

1. Receivecustomer’sinstruction/order2. Arrangetransportation unitaccording tocustomer’srequest3. Transportationunit leaves depotto designatedlocation4. Arrival at locationcommence toloading/unloading ofcustomer’s goods5. Arrival at locationwhere customer’sgoods to bedelivered.Loading/unloadingcustomer’s goodsHalal Transportation Process7. Transport unitreturn to depot6. Additional pickupand drop-off points10

1.Receiving/unloading- Unload fromsupplier’s vehicle-Shift materials toinspection area.2. Inspection- Ensure compliance withspecifications base onpurchase orders.-Count material andcheck against shippinginvoice. Report on statusof count to inventorycontrol. Note anydiscrepancies.3. Storage- Move incomingsupplies to specialpicking locationand/or storagelocation4. Replenishment- Move supplies fromstorage location tospecial picking location5. Order picking- Select items fromspecial picking locationor storage based on thepick listHalalWarehousingProcess9. Shipping/loading-Load outbound carrierand report to inventorycontrol.8. Staging-Arrange ordersaccording to customerand/or carrier that willtransport products7. PackingPackage orders forcustomers; mark orlabel containers thathold customer orders6. CheckingCheck picked orders foraccuracy of item,quantity, and condition;compare quantity,quality, labeling, andaddress with customer’sorder to ensurecompliance.11

1. Products and/orgoods received fromdistribution centreand storage productsand/or goods.2. Products and/or goodsprocessing:-Identification, segregation,handling and labelling-Unloading to storage location3. Shelf display/ Storage- Identification, segregation,handling and labelling toprevent crosscontamination4. Check out-Identification, segregation,handling and labelling toprevent contamination-Break-bulking, sorting andrepacking-Storage for frozen and chilledproducts-Storage at general cargo (forambient products)5. End user/ConsumerHalal Retailing Process12

Halal ServicesBesides merchandise, Halal services are also an important componentof the Halal market:-Islamic BankingSecurities & BondsTravel & TourismSupply Chain & LogisticsEducation & TrainingFood ServicesEntertainmentInformation TechnologyHalal logistics is significant to ensure that Halal products remain asHALAL throughout the supply chain – ‘From farm to fork’.13

Overview of the Halal IndustryThe world Halal food industry estimated to increase to USD670billion in 2012 from USD635 billion in 2009 (Source: WHF)With the growth of global economy and increase in consumerbuying powers and awareness, the demand for Halal productswill also grow.Halal industry has become the main alternative not only forMuslim but also for non-Muslim consumers.14

Halal Initiatives in MalaysiaThrough one of the Government’s plan for the development ofthe industry in IMP3, the objective has incurred Malaysia as theglobal Halal hub for production and trade merchandize andHalal services such as logistics.Halal industry basically do not only focus to halal food productonly like those understood previously; it include services sectorsuch as logistics, packaging, branding, and market. It alsoinclude pharmaceutical products, self adornment and cosmetic,finance, entertainment, investment, tourism, etc.15

Current Scenario of Halal Products SupplyChainRaw materials for Halal products are sourced globally with lack oftraceability.Legal status and protection of Halal often missing.Expected Halal standards and procedures are not applied throughoutthe supply chain.Inaccurate LabellingMultiple and various certification bodiesNo proper segregation of products within the supply chain.16

Potential World Halal MarketUSD580 billionUSD2.1 trillionUSD900 million– Annual global market value for Halal food trade– Annual global market value for entire Halal trade– Annual retail sales of Halal meat in the United Kingdom1.6 billion – Present global Muslim population (20% of total worldpopulation of 8.2 billion)1 billion – Muslim population in Asia3 billion – Estimated global Muslim population in 2010Source: 3 rd Industrial Master Plan (IMP3 2006 – 2020)17

Market OverviewFrom a market perspective, the traditional major target markets remainin Asia and the Middle East countries. However, there are influentialdeveloping Halal markets in the UK, Europe and the USA withsignificant market size.The developing Halal markets of Europe and the US play an interestingrole, because they are markets that also play defining roles in othermarkets around the worldAs the dynamics within the Muslim world change, and globalizationtrends continue to shape people’s tastes, habit and spending patternsacross the world, we are likely to see moves in the developing Halalmarkets having increasingly influential roles in the established marketsof the Middle East and Asia.18

Market Review – Northern AfricaNorthern African countries accounted more than 90% Muslims andready market for Halal products.Need to create more awareness on Halal standards and certifications.Currently there are no specific Halal standards or certification in thesecountries19

Market Review – Other Parts of AfricaAlthough South Africa is a small market but is an important market forHalal products. It has four Halal Certification bodies with variousstandards.Muslims population in South Africa are very particular on Halalness ofevery products and thus there is a ready market for Halal products.Although there is a huge Muslim population in Western and EasternAfrica, the Halal market is still not developed.Halal standards and Certification are not available in this part of theworld20

Market Review – West Asia (Turkey, SaudiArabia, Iraq, Syria, Yemen, UAE)West Asia is a ready market for Halal products and services.Although there are no specific Halal standards in these countries, allproducts imported or manufactured locally must be Halal (whethercertified or not).Most of the countries are open for imported products and as suchthere is intense competition.In the case of Turkey, it is already promoting itself as the Halalgateway to Europe and are coming with its own standards andcertification.21

Market Review – South Central Asia (India,Bangladesh, Pakistan, Turkmenistan,Kyrgyzstan)South Central Asia is a massive untapped market.Most are Muslim countries but without any Halal standards orcertification.22

Market Review – ASEANASEAN countries are one of the world’s leading suppliers andalso importers of Halal certified products in the world. Althoughthese countries compete in the international front, there hasbeen substantial trading in Halal products among them. Forexample, Indonesia is the biggest buyer of Malaysian Halal foodand Thailand is the largest Halal certified productsmanufacturers in the region.China is a huge and untapped market for Halal products andservices.23

Market Review – North AmericanA market of 7.0 million Muslims who are looking for Halalproducts. However, Halal products are not readily available inthis market.24

Market Review – EuropeanA relatively small market but a serious market with highpurchasing powerRussia and other markets – need to create awareness25

Advantage of Halal Value ChainPure hygiene and sanitation procedures for manufacturers and serviceproviders.Provides traceability of products through close monitoring and controlConsistent with GMP and HACCP which ensure products are safe and‘Toyyib’Worldwide acceptance of Halal lifestyle – personal hygiene and healthstandardsAssures safer and higher quality products through various controls andprocedures26

Justification for Halal Products and ServicesHalal is more and more a complete range of product offering in supermarketschains worldwide, as well as in 5-star hotels and restaurants and fast foodchains, airline meals, school dinners, military and even prison rations.We see this phenomena applying not only on food items. Personal hygiene andhealthcare products, toiletries and cosmetics are all appearing as Halal options.Once Halal is understood as a lifestyle choice, the range of option increasesexponentially.Because with the movement of Halal products around the world, the increase inawareness of Halal in general, and in turn added value surrounding Halal, and ofthe holistic and interdependence of the entire Halal value chain, we are seeingentirely new sectors emerging, relating to Halal logistics, security, auditing andindustrial development.27

Justification for Halal Products and Services –cont’dWith major investment in Halal production and manufacture at one endof the chain, and major investment in the retail sector at the other end,maintaining the integrity of the Halal chain at all points in between isbecoming increasingly important.The Halal integrity in the handling, storage, warehousing, andtransportation by road, sea and air of Halal certified products, and alsodedicated Halal-certified zones are fast becoming a reality.The creation of controlled Halal – only industrial food parks, free zones,DistriParks will be part of the future of this Halal industry. As themarket demand continues to increase, more links in the supply chainwill be created.28

Preserving Halal Integrity in Supply ChainHalal supply chain problems are not only limited to the western andnon-Muslim countries. It affects all countries and is a global issues.Halal is a major industry and producers as well as service providersmust take control of the Halal Supply Chain.It is not sufficient and acceptable to label products ‘Halal’. Strictcontrol and audit procedures must be in place to ensure Halal Integrity.Full supervision of trained Halal auditors in production facilities is vitalfor Halal Integrity.29

OpportunitiesThere are almost 3 billion Muslim consumers of Halal products in the world.The number is increasing rapidly. With increasing awareness, more and morecountries are requesting for Halal certified products. The demand from non-Muslims are also increasing.More and more Supermarkets and Hypermarkets are adding Halal Shelves toattract ethnic Muslim population in non-Muslim countries. For exampleTESCO in UK and CARREFOUR in France.Around 80% of the Halal food industry is in the hands of non-Muslims. TheBrazilians have been big halal producers for decades. Three-quarters ofchickens exported by France are halal.30

ConclusionHalal is on the move.It is being reborn into the age of globalization, and indeed,globalization suits the nature and quality of Halal.Halal is made to be global.Halal is for everyone.31

Thank you for your kindattention32

Q&A Session33