Halal Logistics Business Model

1. Halal Logistics Business Model
Togar M. Simatupang, FCILT
Institut Teknologi Bandung dan Institut Teknologi Del
Zoominar on “Halal Logistics in Indonesia, awakening of giant potential”
Chartered Institute of Logistics and Transport (CILT) Indonesia
15 Juli 2021

2. 2

3. Overview
• Halal as a new source of economic growth
• Halal Supply Chain
• Halal Supply Chain Implementation
• Halal Supply Chain Challenges
• Halal Logistics Service Business Model
• Closing
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4. Halal as a new source of economic growth?
Government
Support
Infrastructure
Production
and Service
Talent (human
capital)
Reference
Center
• Halal food and drink
• Halal cosmetics and personal care
• Halal ingredients
• Livestock and agricultural products
• Halal services (logistics, banking, takaful,
health, tourism)
• Ministry
• Industrial development
• Certification
• Standard development
• Enforcement
• Badan Penyelenggara Jaminan Produk
Halal (BPJPH) or Organizing Body of Halal
Assurance
• Halal industrial park
• Halal R&D - testing laboratory
• Traceability system
• Standards and certifications
• Information and communication
technology
• Halal talent development program
• Halal knowledge worker
• Halal executives and auditors
• Syllabus at universities and academies
• National Work Competency Standards
• Competence test
• Consulting center
• Data warehouse
• Knowledge and dissemination tools
• Business and market intelligence
Halal Supply
Chain
• Halal logistics
• Halal parks
• Halal entrepreneurship
• SME Development
• Export promotion
• Islamic Financing
Objective:
Development of an integrated
and comprehensive national halal
industry throughout the halal
value chain
4
Total Halal Lifestyle Global Spending will
increase by about 10%/year until 2019 with a
value of US$ 3.7 T, and US$ 10 T in 2030
Source: State of the Global Islamic Economy

5. Integrated Halal Value Chain
Source: “Indonesia’s Halal Industry: Thriving Domestic Halal Economy”, Insight: Islamic Economy Bulletin, Sixth Edition, November 2019.
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6. Halal Logistics Opportunities
Sea and Air
Transport
Customs
Brokerage
Container
Transport
Warehouse
Management
Sea and Air
Transport
• Halal shipping from
country of origin
• Halal entry
documentation
• Halal local authority
approval
• Halal order
processing and
management
• Halal multimodal
transport operator
• At all domestic
seaports, airports,
land entry and exit
points
• At all international
seaports, airports,
land entry and exit
points
• Fleet management
according to the
halal logistics
process
• Road and rail
distribution
• Transport of
dangerous goods
• Handling and
transportation of
heavy lifts
• Cross borders
• Open storage
• Container storage
• Halal warehouse
management
operational
processes and
procedures
• Bonded facilities
• Capacity, load and
route planning
• Cross-docking
• Cargo consolidation
• Radio Frequency
(RF) Capability
• Halal shipping to
destination
countries
• Halal exit
documentation
• Halal local authority
approval
• Halal order
processing and
management
• Halal multimodal
transport operator
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7. Integrated Halal Supply Chain
Source: Marco Tieman et al. (2012). “Principles in halal supply chain management”, Journal of Islamic Marketing,
Vol. 3 No. 3, pp. 217-243.
The process of managing the
procurement, movement, storage
and handling of food products
through the organization and
supply chain is in accordance with
the general principles of Sharia
law (Tieman, 2009).
Three critical points in maintaining
halal status (Jaafar and Omar,
2011):
1. Supplier Obligations
2. Transformation from raw
materials to final products
3. Distribution system
The International Halal Logistics
Standard, IHIAS 0100:2010
launched in 2010, was developed
under the Islamic Chamber of
Commerce & Industry and the
International Halal Integrity
Alliance.
Halal Policy
Supply Chain Objectives
Logistics Control
Supply Chain
Resources
Supply Chain
Network
Structure
Supply Chain
Business Process
Halal
Performance
P
r
o
d
u
c
t
M
a
r
k
e
t
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8. Robust Halal Supply Chain Model
Resource: Marco Tieman et al. (2012). “Principles in halal supply chain management”, Journal of Islamic Marketing,
Vol. 3 No. 3, pp. 217-243.
Halal Policy
Supply Chain Objectives
Logistics Control
Supply Chain
Resources
Supply Chain
Network
Structure
Supply Chain
Business Process
Halal
Performance
P
r
o
d
u
c
t
M
a
r
k
e
t
Bulk or unit: wet
(chilled, frozen) or dry
(ambient
temperature)
Halal supply chain
code: tracking and
tracing, staff
competence
Halal control activities
and assurance
activities
Simple supply chain
structure; Halal
gateway partner
Muslim or Non-
Muslim Countries
Consolidation of halal
flows;
customer order decouling
point (CODP) in HRDC
Pastikan ketahanan
melalui pengurangan
dan penghapusan
kerentanan
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9. Halal Supply Chain Implementation Framework
Source: Wan Azlan Wan Hassan et al. (2017). “The Implementation Framework of Halal Supply Chain Management
System”, https://indjst.org/articles/the-implementation-framework-of-halal-supply-chain-management-systems
The generic implementation
framework describes the three
important phases of:
i) pre-implementation stage,
ii) implementation stage, and
iii) post-implementation phase.
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10. Halal Logistics (transportation) System
Source: “CXL HALAL is one of SEJUNG GROUP’s global brands”, http://www.sejunggroup.com/business/halal_logistics.asp 10

11. Halal Logistics Transport Vehicle System
Source: “CXL HALAL is one of SEJUNG GROUP’s global brands”, http://www.sejunggroup.com/business/halal_logistics.asp
SEJUNG SHIPPING CO., LTD provides halal
logistics transportation vehicles to ensure the
integrity of halal transportation
Halal zones are separated inside the
truck to prevent cross-contamination
of non-halal products
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12. The Only Halal Logistics Quality System in the World with
Traceability
Source: “CXL HALAL is one of SEJUNG GROUP’s global brands”, http://www.sejunggroup.com/business/halal_logistics.asp
Develop transportation vehicles
and container cleaning systems
for halal logistics
Develop a fast and accurate
diagnosis system to identify
halal
Develop standard operating
procedures (SOP) for the
quality system to manage the
halal logistics system
Blockchain-based halal logistics management technology and halal rapid
inspection technology of raw materials and finished products, provide a bridge to
enter the global halal logistics industry, and a proven logistics management
system model is expected to be applied to biopharmaceutical supply chain
management systems.
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13. Halal Supply Chain Challenges
Demand and
Market
Technology and
Information
Financing R&D
Human Capital Infrastructure
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14. Success Factors for Adoption of Halal Logistics
1. Economic feasibility of Halal Logistics and
compliant organization size
2. Organizational readiness to adopt Halal
Logistics
3. Maintaining Halal Integrity (HI) with the help of
the necessary cold chain
4. Enabling organizational culture and change
management to adopt Halal Logistics
5. Government policy and support for Halal
dedicated Logistics with enabling regulatory
framework and service provider enforcement
6. Supporting trained halal logistics workers with
capacity building and training of halal logistics
service providers
7. Innovate the traditional logistics system to
improve it, according to the requirements of the
Halal Logistics system
8. Strong Information and Communication
Technology (ICT) support
9. Standardization, codification and proper
guidelines for Halal Logistics
10. Coordination and collaboration between halal
logistics service providers
11. Halal Supply Chain Agility
12. Compatibility of existing logistics with Halal
Logistics
13. Ethical behavior of Halal logistics service
providers
14. Developing globally acceptable Halal brand and
its effective implementation
15. Globalization; the cultural-religious-political
aspects of consumption; customer request;
customer willingness to pay for Halal Logistics
Source: Haleem, A.; Khan, M.I.; Khan, S. Understanding the Adoption of Halal Logistics through Critical Success Factors and Stakeholder
Objectives. Logistics 2021, 5, 38. https://doi.org/10.3390/logistics5020038
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15. Major Players in Halal Supply Chain
1. Brand Owner
 Extending halal assurance from factory
to consumer point of purchase
 Creating a strong, effective and efficient
halal supply chain
 Strengthen commercial brand
2. Logistics Service Provider
3. Halal Industrial Park
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16. Types of Logistics Service Providers
Special and
advanced (added
value)
Basic activities
(movement and
storage)
Service
(selected services only)
Solution
(complete end to end
solution)
Based on non-physical assets
Physical asset based
• Halal storage
• Halal transportation
• Halal goods delivery
• HRDC: Value-added
logistics (VAL)
• HRDC: Processing
• HRDC: cross chain
control center (4PL
halal solution)
• Halal 3PL Solution
Source: Marco Tieman (2015), Halal Supply Chain Management: Principles & Opportunities,
www.lbbinternational.com
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17. Shared Value Creation Model for Halal Logistics Services
Source: Okdinawati, L., Simatupang, T.M., Imran, A., Lestari, Y.D. (2021), "Value Co-Creation Model of Halal Logistics Services",
Jurnal Ilmiah Teknik Industri, Vol. 20, No. 1, Hal. 45-60, doi:10.23917/jiti.v20i1.13028 17

18. Halal Logistics Service Business Model
Source: Okdinawati, L., Simatupang, T.M., Imran, A., Lestari, Y.D. (2021), "Value Co-Creation Model of Halal Logistics Services", Jurnal
Ilmiah Teknik Industri, Vol. 20, No. 1, Hal. 45-60, doi:10.23917/jiti.v20i1.13028 18

19. Adaptation of Halal Logistics Service Business Model in
Operational Planning
Source: Okdinawati, L., Simatupang, T.M., Imran, A., Lestari, Y.D. (2021), "Value Co-Creation Model of Halal Logistics Services", Jurnal Ilmiah Teknik Industri,
Vol. 20, No. 1, Hal. 45-60, doi:10.23917/jiti.v20i1.13028 19

20. Closing
• The value co-creation model for halal logistics services enables to assure
the principles of halal logistics and to control halal activities along the
supply chain.
• The shared value creation model is developed as a cycle of interaction
between business parties starting from a value proposition that offers
social factors.
• The value proposition is used to design value creation in the logistics
processes associated with production, processing, packaging,
transportation, storage, and retail operations.
• The business model and its adaptation in operational planning for
transportation companies as halal logistics services need to be developed
because companies have to develop different business models when they
apply the halal concept in their activities.
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21. Thank You
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