Halal procurement strategy in the food industry: a focus group discussion

Professionalisation of the halal purchasing function is important as it directly contributes to the sustainability of halal sourcing, production and supply chain management. In order to protect the halal certificate and licence to operate of a company in Muslim markets, halal purchasing has become a critical success factor in professional halal business management. Halal and food safety risks could also be better controlled when halal is anchored into the procurement strategy. This allows halal and food safety to come together. This is essential as the brand owner is accountable for both halal and food safety. Halal procurement strategy is hereby not only the responsibility of the purchasing department but also that of top management. The above measures are also known as pre-market control.

Under the aegis of Universiti Malaya Halal Research Centre (UMHRC), a focus group discussion was conducted with the incentive to advancing halal procurement strategies for halal food industries. The focus group discussion with the food industry was tasked to answer the following research questions:

1. 1  What is the impact of halal for the procurement strategy of halal critical items?

2. 2  How to manage suppliers of halal critical items?

3. 3  What are possible collaborative purchasing models for halal critical items?

According to the focus group participants the following halal purchasing commodities are critical:

• food ingredients
• equipment and tools used in production
• services and works that take place in the production facility
• laboratory supplies (for testing)
• primary packaging
• water filters
• cleaning chemicals and hand sanitisers
• logistics services (both sourcing and distribution).

Halal procurement strategies are founded on solid halal risk and reputation management. Harmonise, standardise, and simplify halal standards, halal certification bodies and halal operations. Due to the complexity of halal purchasing, food industries highlighted the importance to have backup plans for halal critical items purchasing. There is a preference for local suppliers of halal critical items. All halal critical items suppliers need to be halal certified, although this might not necessarily be required from the halal certification body. Business contingency plans of suppliers are essential to ensure that they are a robust supplier of halal critical items and are resilient in case of new halal requirements and market developments. Food industries should leverage synergy advantages within their group of companies.

Regarding the supplier-based structure and size, the participants prefer local or regional sourcing of halal critical items depending on their risk profile. Multiple sourcing, instead of single sourcing, is part of any good purchasing strategy. Regarding the substance of relationship, at the beginning of a supplier relationship of halal critical items there should be a high coordination of activities, high adaptation of resources, and high interaction of people. In a more mature relationship this changes to low coordination of activities, low adaptation of resources, and low interaction of people. Monitoring and evaluation of halal critical suppliers require a combination of vendor rating, benchmarking, and physical audits.

According to the participants there is a preference for direct process and activity collaboration only within their own group of companies; which they are already currently practicing. Indirect process and activity collaboration with other purchasing organisations outside their group of companies on the other hand is possible. Activity outsourcing however, needs to follow the processes determined by the brand owner.

For access to the academic publication, visit the International Journal of Islamic Marketing and Branding

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