Dragon Sourcing Case Study on Sourcing Nutrition Products in Indonesia

Dragon Sourcing
Your Tailored Approach to Emerging Markets
Nutrition Product Manufacturers Sourcing in Indonesia - Case Study
April 11th, 2019

© 2019 Dragon Sourcing. All rights reserved.
Objectives and approach
Context
Objectives:
• Dragon Sourcing to carry sourcing services for the nutrition products
manufactures with MUI Halal certificate
Categories:
• Fish oil and Krill Oil softgels
• Fiber tablet to replace Fiber and Herb
Geographical scope:
• Indonesia all main islands:
Greater Sunda Islands: Java, Sumatra, Kalimantan, Sulawesi,
Bali, Maluku, Western New Guinea (Papau)
Deliverables:
Phase1: Shortlisting Potential Suppliers
• Suppliers list to be included in Phase 2
Phase 2: Recommending suppliers for auditing based on RFI/RFQ
• RFI Report
• Score Card
• Company Profiles
• Recommended supplier list
DS Approach consists in the following work steps in 2 separate phases:
0. Understand MUI Halal Requirement and organization
Phase 1: Shortlisting Potential Suppliers
1. Collect detailed information about the nature of the products required
(suppliers capabilities required, specifications, volumes, MUI Halal certificate,
production technology requirements)
2. Identify long list of suppliers in the selected markets by leveraging B2B
Websites, DS Database, Fair catalogues, Chamber of Commerce, Magazines,
Network, References
3. Carry out a phone pre-screening of the suppliers based on 4-5 screening
criteria per category (e.g.: capability to make the product, min size, having
Halal certificate quality certification, existing MUI Halal products, industry
experiences, get the MUI Halal product list that are on Indonesian market)
Phase 2: Recommending Producers for auditing based on RFI
4. Develop the RFI template - jointly with Client - to include all key supplier
qualification criteria (e.g.: financial, technology, corporate responsibility, quality
certification, MOQ, client references…) and quotation requirements
5. Administer the RFI - the RFI is translated to the local languages as relevant,
and distributed to the relevant suppliers, with telephone follow-up to push for
maximum participation
6. Analyze of RFI responses based on qualitative criteria and preparation of a
report which profiles & objectively ranks the suppliers by capability and
competitiveness, including a recommendation for those to be audited
7. Carry out pre-audits of recommended suppliers jointly with Client (Optional)
2

Steps W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 Auditing
0. Understand MUI Halal Requirement
and organization
Phase 1: Shortlisting Potential Suppliers
1. Demand Analysis
2. Supply Market Analysis
3. Telephone Pre-screening
Phase 2: Recommending suppliers for auditing based on RFI/RFQ
4. Develop RFI template
5. Conduct RFI Administration
6. Develop the Score card and Analyze
RFI Responses
7. Suppliers Auditing (optional)
The project is scheduled for a 5 working weeks period for Phase 1 and 7 weeks for phase 2.
A weekly progress report will be sent every Friday. At the end of W2, if no suppliers were identified
for a specific category, adding a new category should be considered.
At the end of step 3 Client can decide or not to continue with Dragon Sourcing for Phase 2.
© 2019 Dragon Sourcing. All rights reserved. 3
RFI template
Approved
Shortlist for
recommended
Audit
Suppliers list
to be included
in Phase 2
MillstonesFinishedNot Started In Progress

• MUI stands for Majelis Ulama Indonesia
• MUI Halal certificate is a written fatwa / official statement from Indonesian Ulama Council (Majelis Ulama Indonesia/MUI) which
stated that the products are in accordance with the Islamic Syariat. Companies wishing to register halal certification with LPPOM
MUI, including processing industries (food, medicine, cosmetics), slaughterhouses (RPH), restaurants, catering, kitchens, etc.
must meet the halal certification requirements contained in HAS 23000 documents.
• HAS 23000 is a document that contains LPPOM MUI halal certification requirements. HAS 23000 consists of two parts, namely
– Part I of Halal Certification Requirements: Criteria Halal Assurance System (HAS 23000: 1) and
– Part (II) of the Halal Certification Requirements: Policies and Procedures (HAS 23000: 2).
• Objective of Certification: MUI Halal certification for food products, medicines, cosmetics and other products made to assure the
halal status, so as to reassure consumers in the inner consume
• There are no specific rules and regulations pertaining to the establishment of Halal certification bodies, the discretion of whether or
not to accept products certified by the bodies is set to the consumers and the consuming countries. Different countries have their
own criteria and procedures for issuing Halal certificates.
Main differences with other Muslim countries such as Malaysia and Brunei Dar El Salam
• There are three bases used in establishing halal: Syariah base (Islamic foundation), Scientific base (scientific foundation), and
Cultural base (cultural background aspects).
• Some products that have been certified halal by Jakim (Kemajuan Islam Malaysia), can not enter Indonesia as must be certified
halal by MUI (Halal Indonesia). Conversely, some Indonesian products that have been certified halal by MUI if they want to enter
Malaysia must also be halal certified by Jakim.
Phase 0 – Halal Certification by MUI (1/6)

• Process of uploading until pre-audit: 20 days
• Process of completing the pre-audit to the audit: 15 days
• Audit process until the fatwa commission meeting: 15
days
• Process of fatwa commission meeting until the issuance
of halal certificate: 25 days
• Total certification time: 75 days
Understanding
halal certification
requirements and
following Halal
Assurance System
(HAS) Training
Implementing
Halal Assurance
System
Preparing Halal
Certification
Document
Applying and
Registering for
halal certificate
(upload data)
Monitoring pre-
audit and payment
of contract for
halal certification
process
Submission of
audit schedule
Performing audit
Performing post-
audit monitoring
Receiving halal
certificate
• Halal certificate obtained is valid for two (2) years
• Renewal is 3 months before the validity
MUI Halal Certification Procedure
• Product list
• Document of Ingredient list.
• List of slaughterers (specific for slaughter house),
• Product matrix
• SJH (Sistem Jaminan Halal = Halal Guarantee System)
Manual
• Flow Process Diagram
• Address list of production facilities,
• Evidence of Halal policy socialization,
• Evidence of internal training and internal audit evidence
The above process is applicable for processing industries (food, medicine, cosmetics),
slaughterhouses, and restaurants/ catering/ kitchens, etc.
MUI Halal Certification Requirements
MUI Halal Certification Validity & Renewal
Approximate length of the MUL Halal
Certification process

There are 34 Halal Certifier Bodies approved by LPPOM MUI from 19 country, contain 29 bodies approved for (cattle) slaughtering category, 29
bodies approved for raw material category, 14 bodies approved for flavor category. The MUI decree regarding list of approved foreign halal
certification body is effective for 2 (two) years as of the date it is stipulated and it will be monitored and evaluated once a year.
List of Approved Foreign Halal Certification Bodies
Sl.
No
Name of Halal
Certification Bodies
Country
Expiry
Status
1
Majelis Ugama Islam
Singapore (MUIS)
Singapore 2020/06/08
2
Jabatan Kemajuan Islam
Malaysia (JAKIM)
Malaysia 2020/06/08
3
Bahagian Kawalan
Makanan Halal Jabatan
Hal Ehwal Syariah
Brunei
Darussalam
2020/06/08
4
Muslim Professional Japan
Association (MPJA)
Japan 2019/06/06
5
The Japan Moslem
Association (JMA)
Japan 2020/09/28
6
Taiwan Halal Integrity
Development Association
(THIDA)
Taiwan 2020/09/27
7
Jamiat Ulama Halal
Foundation
India 2020/06/08
Sl.
No
Name of Halal
Country
Expiry
Status
8
Jamiat Ulama I-Hind Halal
Trust
India 2020/06/08
9
Asia Pacific Halal Council
Co Ltd (APHC)
Hong Kong 2019/10/02
10
The Central Islamic Council
of Thailand (CICOT)
Thailand 2020/09/27
11
Halal Certification Agency
(HCA)
Vietnam 2019/05/26
12
Halal Development Institute
of the Phillipines (HDIP)
Philippines 2019/05/26
13
Halal Accreditation Council
(Guarantee) Limited
Sri Lanka 2019/05/26
14
The Islamic Coordinating
Council of Victoria (ICCV)
Australia 2020/06/08
15
Supreme Islamic Council of
Halal Meat in Australia Inc.
(SICHMA)

Sl.
No
Name of Halal
Country
Expiry
Status
23
The Federation of Islamic
Association of New
Zealand, Inc (FIANZ)
New
Zealand
2019/10/02
24
Halal Food Council of
Europe (HFCE)
Belgium 2020/09/28
25
The Muslim Religious
Union of Poland (MRU)
Poland 2020/06/08
26
Halal Quality Control
(HQC)
Netherlands
, Germany
2020/06/08
27
Instituto Halal De Junta
Islamica (Halal Institute of
Spain)
Spain 2020/09/28
28
World Halal Authority
(WHA)
Italy 2019/05/26
29
Total Quality Halal Correct
Certification (TQHCC)
Netherlands
, Germany
2019/06/06
30 HALAL CONTROL Germany 2018/08/02
Sl.
No
Name of Halal
Country
Expiry
Status
16
Australian Halal
Development &
Accreditation (AHDAA)
17
Global halal Trade Center
Pty Ltd (GHTC Pty.Ltd)
18
Western Australian Halal
Authority (WAHA)
19
Australian Halal Authority &
Advisers (AHAA)
20
Global Australian Halal
Certification (GAHC)
21
Asia Pasific Halal Service -
New Zealand, Pty 2011
Limited (APHSNZ-Pty 2011
ltd)
New
Zealand
2020/06/08
22
New Zealand Islamic
Development Trust
(NZIDT)
New
Zealand
2020/09/27

Sl.
No
Name of Halal
Country
Expiry
Status
38
Islamic Services of America
(ISA)
USA 2020/09/27
39
Halal Transaction of
Omaha
USA 2020/06/08
40
The Islamic Food and
Nutrition Council of
America (IFANCA)
USA 2020/06/08
41
Halal Food Council USA
(HFC USA)
USA 2020/09/27
42
American Halal Foundation
(AHF)
USA 2020/09/27
43
Federation of Muslims
Associations in Brazil
(FAMBRAS)
Brazil 2020/09/12
44
Islamic Dissemination
Centre for Latin America
(CDIAL) Brazil
Brazil 2018/10/28
45
National Independent Halal
Trust (NIHT)
South Africa 2019/05/26
Sl.
No
Name of Halal
Country
Expiry
Status
31
Halal Certification Europe
(HCE)
England 2020/09/27
32
Halal Food Authority (HFA)
– UK
UK 2019/05/26
33
Halal Feed and Food
Inspection Authority
(HFFIA)
Netherlands 2018/07/18
34
Halal Certification Services
(HCS)
Switzerland 2020/09/27
35
Eurasia Halal Services
Centre
Turkey 2019/10/02
36
HAFSA Halal Certification
and Food Imp&Exp Ltd
Turkey 2019/06/08
37
Islamic Foundation of
Ireland (IFI)
Ireland 2020/09/11

MUI certification bodies local addresses in Indonesia
Address 1
Address 2
Secretary LPPOM MUI
Gedung Majelis Ulama Indonesia
Jl. Proklamasi No. 51 Menteng Jakarta
Global Halal Centre
Jl. Pemuda No 5 - Bogor 16161
Does the certification body has any tie up with the
government?
Yes
If MUI has tie up with government, then is it central
government or state government?
State Government (Ministry Of Religion)
Are the categories in focus required to be certified using the same process?
Fish oil and Krill Oil soft gels Yes
Fiber tablet to replace Fiber and Herb Yes
Vanilla powdered meal replacement Yes

Demand Analysis
# Category
Formula
No.
Product Name
Fill Amount
per bottle
Shelf Life
Current
Paid Unit
Price &
Currency
Annual Qty.
(12 mos forecast
as of 4.23.18)
Unit Packing Remark
1 Fish oil and Krill oil softgels
xxx Fish Oil 90 softgels 24 months xxx xxx Bottles 120CC VITAMIN PACKER BOTTLE
xxx Krill Oil 30 softgels 24 months xxx xxx Bottles 50CC VITAMIN PACKER BOTTLE
krill oil is quite difficult to
find, so any alternative
Omega-3 is welcome.
2
Fiber tablets
to replace Fiber and Herb
xxx
FIBER & HERB
TABLETS
180 tablets 24 months xxx xxx Bottles 275CC VITAMIN PACKER BOTTLE
P.S. Suppliers have existing formulas ready for private label is what Client want.

Nutrition Product Manufacturers Sourcing in Indonesia - Progress Review
35 35
3 3 2
15 15
3 3 2 1 1 0 0 0
37 37
4 4 3
2 2
1 1
0
5
10
15
20
25
30
35
40
No.ofsuppliersidentified
No.ofsuppliershasbeencalled
No.ofsupplierspassedphonescreening
No.ofsuppliersincludedinRFIprocess
No.ofRFIreceived
No.ofRFIreceived
No.ofRFIreceived
No.ofRFIreceived
Fish Oil Omega-3 Krill Oil Fiber tablets
#ofsuppliers
Nutrition Product Manufacturers Sourcing in Indonesia - Project Progress Review
Bali island
Sumatra island
Java island
Fish Oil Omega 3 Krill Oil Fiber Tablet

Location on Map of suppliers identified
64 suppliers are identified in Indonesia so far, 61 in Java, 2 in Sumatra, 1 in Bali.
Jakarta
Java
Kalimantan
Sulawesi
Sumatera
Fish Oil supplier
Krill Oil supplier
Omega-3 supplier
Fiber Tablets supplier
35
151 39
2
1
Maluku
Bali
Western New Guinea
(Papua)
Product
# of suppliers
identified in total
Java Sumatra Bali Kalimantan Sulawesi Maluku
Western New
Guinea (Papau)
Population for
reference
141 Million 50 Million 4 Million 19 Million 17 Million 2 Million 4 Million
Fish Oil 38 35 2 1 0 0 0 0
Krill Oil 1 1 0 0 0 0 0 0
Omega-3 15 15 0 0 0 0 0 0
Fiber Tablets 39 39 0 0 0 0 0 0
# of suppliers in total 64 61 2 1

No. Phone Screening Questions Screening Criteria
1
Are you able to supply below products? Are you producing in-house or outsourcing
from other suppliers?
* Fish Oil
* Krill Oil (or Omega-3)
* Fiber Tablets
• Suppliers currently producing any of the three products is OK.
• Will keep the traders.
2
Do you have MUI Halal certificate for Fish oil / Krill oil (Omega-3) / Fiber tablets ?
When was the certificate given, when it’ll be expired?
• Must have MUI Halal certificate available.
• Get the information for receiving date and expiry date of
supplier MUI Halal certificate.
3
Are above products BPOM certified? Do they have BPOM registration number?
(Badan Pengawas Obat dan Makanan)
• Manufacturer must be BPOM certified.
• Products must have registration number with BPOM.
4 Are above products (fish oil, krill oil, fiber tablet) ready for private label ?
• Must have existing formulas for private label, which can be
labelled and sell under client brand.
• If suppliers don’t have existing formulas, only can produce
according to client request, they will be excluded as it’ll take
much longer time to launch the products.
5
Are you reviewing new legislation and other requirements, i.e. GMP’s, on a regular
basis?
GMP is preferred, but do not exclude supplier if they don’t have
GMP.
Phone Screening Criteria

Phone Screening – Rejection Reason Analysis
So far, 53 suppliers failed phone screening with below reasons…
Rejection reasons Java Sumatra Bali Total Percentage
Supplier don't have existing formulas ready for private label. 18 18 34%
Supplier can not supply any of the requested products in requested form: fish oil softgel / Krill oil Softgel / Omega-3 softgel / Fiber tablets. 15 1 16 30%
Supplier only sell in their own brand, not willing to do private label. 9 2 11 21%
Supplier don't have MUI halal certificate. 8 8 15%
Total 50 53 100%
34%
30%
21%
15%
Phone screening rejection reason analysis

© 2019 Dragon Sourcing. All rights reserved.. 15
RFI Scorecard – Weight per section
Section weight % Max. Point
Company Background 15% 15
Production Capability 15% 15
R&D Capability 15% 15
Quality Control Management 15% 15
Certifications / Registrations / License / Inspections 15% 15
Regulatory 10% 10
Sourcing 10% 10
Cooperation Willingness 5% 5
In total 100% 100
15%
15%
15%
15%
15%
10%
10%
5%
Company Background
Production Capability
R&D Capability
Quality Control Management
Certifications / Registrations / License / Inspections
Regulatory
Sourcing
Cooperation Willingness

RFI Scorecard Sum up
78% 78%
73%
88%
78%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
10
20
30
40
50
60
70
80
90
100
110
Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5
Indonesia
RFIScore
Fish Oil / Omega-3 / Fiber Tablets – Supplier RFI Scorecard Sum up
Cooperation Willingness
Sourcing
Regulatory
Certifications / Registrations / License / Inspections
Quality Control Management
R&D Capability
Production Capability
Company Background
% of completion
66
76
69
53
43

RFI Score per section (out of 100)
88
49
40
64
31
0
10
20
30
40
50
60
70
80
90
100
Company Background - Score out of 100
68
79
94
37 36
0
10
20
30
40
50
60
70
80
90
100
Production Capability - Score out of 100
85 86 79
68
51
0
10
20
30
40
50
60
70
80
90
100
R&D Capability - Score out of 100
64
55
76
48
61
0
10
20
30
40
50
60
70
80
90
100
Quality Control Management - Score out of 100

RFI Score per section (out of 100)
79
29
45 45
37
0
20
40
60
80
100
Certifications / Registrations / License /
Inspections - Score out of 100
96 95
86 86
65
0
20
40
60
80
100
120
supplier 1 supplier 2 supplier 3 supplier 4 supplier 5
Regulatory - Score out of 100
50
80
60
20
10
0
20
40
60
80
100
Sourcing - Score out of 100
70 70
80
70 70
0
10
20
30
40
50
60
70
80
90
100
Cooperation Willingness - Score out of 100

Supplier Company Profile - Example

Dragon Sourcing Case Study on Sourcing Nutrition Products in Indonesia

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