Innovations in Halal Logistics

Transcription

1 Innovations in Halal Logistics Presented by Datuk Che Azizuddin Che Ismail Chief Executive Officer 5th World Halal Research Summit 2012 Kuala Lumpur Convention Centre, 4 th April 2012

2 Table of Content 1. Muslim Demography and Halal Market 2. Evolution of Halal & Trends 3. Why Halal Logistics? 4. Misconceptions About Halal Logistics 5. Role of Innovation in the Halal Logistics

3 1. Muslim Demography and Halal Market

4 Muslim Population 1990 to 2030 Muslim population is expected to grow from 1.6 billion in 2010 to 2.2 billion in 2030; increase by 600 million (average of 2% per year) Constitutes 27% of the world population by countries to have over 1 million Muslim population in 2030 Source: PEW Research Centre (pewresearch.org)

5 Muslim Population by Region Growth of Muslim population in all regions including in Americas and Europe Muslim population is expected to have higher growth rate at 1.7% as compared to non-muslim at 0.9% for the period 2010 to 2020 Source: PEW Research Centre (pewresearch.org)

6 Opportunities for Halal Markets 2010 Year Rank Country Indonesia 154,680, ,847, ,833,000 2 Pakistan 112,303, ,097, ,117,000 3 India 100,873, ,286, ,182,000 4 Bangladesh 102,103, ,607, ,506,000 5 Egypt 53,884,000 80,024, ,065, China 16,839,000 23,308,000 29,949, Malaysia 8,870,000 17,139,000 22,752, Russia 13,634,000 16,379,000 18,556, Philippines 2,872,000 4,737,000 7,094, Thailand 2,324,000 3,952,000 4,261,000 Pakistan s population is expected to surpass Indonesia in 2030 Emergence of potential halal markets in non-muslim countries including India, China and Russia with the expected growth of Muslim population Huge and growing potential for halal market Source: PEW Research Centre (pewresearch.org)

7 Growing Malaysia s Halal Export 2011 No Product RM (Mil) 1 Ingredient 12,312 2 Food & Beverage 11,917 3 Palm Oil Derivatives 7,005 4 Industrial Chemical 2,062 5 Cosmetic & Personal Care 1,815 6 Pharmaceutical 286 Total 35,397 53% increase from RM23.1 billion in % contribution from the total export of RM694.5 billion SMIs represent 75% of Malaysian exporters 19 halal parks across the country Rank Destination Export Value 1 China 12% 2 The United States 9% 3 Singapore 8% 4 Netherlands 6% 5 Japan 6% A lucrative sector with enormous opportunities to support the country s economic growth RM35.4 billion Halal Export Value Source: Halal Industry Development Corporation (HDC)

8 2. Evolution of Halal & Trends

9 Evolution of Halal Source: Marco Tieman, (2011) "The application of Halal in supply chain management: in-depth interviews", Journal of Islamic Marketing, Vol. 2 Iss: 2, pp

10 The Trends 1. Importance of Halal has expanded from meat, to food, cosmetics and pharmaceutical products 2. Halal has gone mainstream 3. Halal is changing from a source focus to supply chain management focus 4. Rising awareness of the importance to control Halal (food) chains by the Muslim world 5. Importance of Halal certification (MS 1500:2009, MS 2400:2010, IHIAS 0100:2010, GCC Halal Standards [in development], other local standards)

11 3. Why Halal Logistics?

12 Why Halal Logistics? 1. To extend the halal integrity from farm to plate! Customer s Perspective 2. To protect the brand integrity of manufacturers! 3. To meet the requirements of more stringent halal standards 4. Religious obligation to avoid direct contact with haram (Kamali, 2008), doubtful products (Al-Qaradawi, 2007), and comply with different schools of thought, local fatwas and local customs (Tieman, 2011) Logistics is the solution to eliminate doubtful circumstances in the halal supply chain

13 The Principles Halal products are segregated from non-halal products to (IHI Alliance, 2010): 1. avoid (cross) contamination 2. avoid making mistakes 3. ensure consistency with Syariah and the expectations of the stakeholders

14 Foundation of Halal SCM Perception Best practice Risk Precaution Direct contact with Haram Cross- contamination Source: Marco Tieman, (2011) "The application of Halal in supply chain management: in-depth interviews", Journal of Islamic Marketing, Vol. 2 Iss: 2, pp

15 Minimum level Preferred level Muslim vs Non-Muslim Countries Perception Risk Direct contact with Haram Source: Marco Tieman and Maznah Che Ghazali, (2011) Principles in Halal Logistics, INCOMAR 2011, September, Putrajaya, Malaysia

16 A Comparison Logistics Non-Muslim Country Muslim Country Warehouse Strict segregation of halal and nonhalal in warehouse process; No combined storage of halal and haram in cold chain environment Dedicated for halal Transportation Terminal No mixing of halal and non-halal on one pallet/load carrier; No mixing of halal and haram in cool transport In consolidation of cargo follow above principles Designated for halal: No mixing of halal and non-halal in transportation. In consolidation of cargo follow above principles Halal certified storage available at North Port and Penang Port Airport (unavailable)

17 4. Misconceptions About Halal Logistics

18 Misconceptions: Halal Logistics is 1. only about transportation and storage services in isolation! 2. more expensive than conventional logistics! 3. is the same for Muslim and non-muslim countries! 4. something to start with only when it is required by law! 5. not critical for the success of Malaysia as global halal hub!

19 5. Role of Innovation in the Halal Logistics

20 Halal Supply Chains Are 1. Complex 2. Vulnerable 3. Based on Islamic values

21 Halal Supply Chains Should Be 1. simplified 2. robust 3. filled with Islamic values This is the goal of halal logistics and our commitment!

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