Utilizing Blockchain Technology to Enhance Halal Integrity: The Perspectives of Halal Certification Bodies

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Halal supply chains have inherent problems or flaws, namely in traceability (the ability to examine and reproduce the exact path of a product in the supply chain) and in organising product recalls; transportation and warehousing (storage) downstream compliance with halal requirements; end-to-end chain integrity (unbroken chain) from source to point of consumer purchase; different halal systems and interpretations of different markets; and lack of IT integration with supply chain partners and halal certification bodies (HCB). A series of high profile halal crises in recent years involving well-known brands have shaken public confidence in the ability of brand owners to assure the authenticity of halal certified products.

Halal blockchains pre-program the requirements of the destination market, such as halal production certificate requirements, halal storage-transportation-terminal handling terms, the encoding of ‘halal’ on freight documents. Furthermore, these blockchains facilitate in managing halal issues and crises. They also facilitate in organising product recalls, for both trades (so-called silent recalls) and the public (broadcast to the con- sumers). In a blockchain you can easily identify the parties that have committed fraud, as this information remains visible, thus discouraging companies in a halal supply chain from fraudulent action. At the same time it enables the rating of halal logistics service providers, distributors, and other supply chain participants based on the performance of their services.

The integrity of halal supply chains is not only of great concern to the Muslim consumer, but also to brand owners in protecting their reputation as providers of halal products. Currently, there are insufficient technologies to address these halal supply chain risks. Even though existing technology is able to track and trace goods from suppliers to retailers, there are still many problem cases every year, and these have a major impact on the sales and reputation of businesses. Such problems are inevitably caused by the difficulties in running complex halal supply chains. One of the potential solutions is to use technology to enhance the transparency of the whole supply chain. One emerging technology frequently mentioned nowadays is the Blockchain. The results show that the blockchain system has the ability to improve food traceability as well as the transparency of the supply chain operations. Halal blockchains have therefore the potential to simplify the management of halal supply chains, not only for the brand owner but also for the HCBs.

Halal issues can be categorized into three problem areas, namely contamination, non-compliance and perception. The discussion group agreed to rely on blockchain technology to provide all the related information necessary to manage halal issues when dealing with contamination and non-compliance cases only. (It was agreed that no information would be required from the blockchain system for perception cases).

The key supply chain parameters were identified as the demographic destination country (Muslim (majority) or non-Muslim country), product characteristics (bulk or unitized), and product environment (ambient/cool chain). Based on these parameters a consensus was reached on the need for the segregation of halal supply chains in designated halal transport, storage and halal compliant terminals, in Muslim (majority) countries, whereas for non-Muslim (majority) countries a more lenient approach was considered permissible.

Effective segregation is only possible with effective communication, where ‘halal supply chain’ needs to be coded on freight documents, freight labels and in ICT systems. Finally, due to the total lack of research on end-to-end cross border halal supply chains, further case studies are recommended for halal supply chains for both the Muslim and non-Muslim (majority) markets.

For the full academic paper, visit the journal.

#halalblockchain #blockchain #halalmarket #halalbusiness #riskmanagement #reputation #halaltrust #halalcertification #halal


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