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Lean supply chain practices in the Halal food

Malihe Manzouri, Mohd Nizam Ab Rahman and Nizaroyani Saibani

Department of Mechanical and Materials Engineering, National University of Malaysia, Bangi, Malaysia, and

Che Rosmawati Che Mohd Zain Graduate school of Management, University Putra Malaysia,

Serdang, Malaysia

Abstract

Purpose – This study aims to assess the possibility of implementing lean practices in the Halal food supply chain, and the barriers to their implementation.

Design/methodology/approach – A survey was used to identify the perceived issues and attitudes towards implementing lean practices in the supply chain. The questionnaire was distributed to 300 Halal food firms in Malaysia. A total of 61 usable replies were received.

Findings – More than 70 percent of the firms reported that lean supply chain (LSC) has not yet been implemented in their firm. Data analysis shows that 14 percent of non-lean firms urgently need to implement lean manufacturing. Market competition and uncertainty was highlighted as an important barrier in implementing LSC among lean firms. In contrast, lack of customer awareness of LSCM practices was recognised as a major barrier in non-lean firms.

Originality/value – There is little documentation regarding the status of LSC implementation in the Halal food industries, and therefore identifying the necessity of its implementation and the important impediments was identified as a gap in the existing literature. This paper provides insightful information on the necessity of implementing lean manufacturing practices in Halal food supply chains.

Keywords Supply chain, Lean practices, Barriers, Halal food industries

Paper type Research paper

1. Introduction In the intensely competitive business world, the survival of even the most well-established manufacturer depends on the ability to implement continuous improvement strategies to reduce their costs and wastes. Hence, irrespective of the business domain, companies need to focus on speed, efficiency, cost, customer value, etc. So, supply chain managers can move towards the utilization of lean processes to gain more competitive advantages.

Since 1.57 billion (Temporal, 2012) of the world’s population is Muslim (with presence in all continents), the area of Islamic products (Halal products) is seen as a major opportunity in the global business market. Halal producers attempt to introduce their products as a symbol of quality and excellence. As a result they can market their products not only to Muslims but all over the world. Halal food is the most important section of Halal products, not only as it is part of Islamic law, but also as its emphasis is on cleanliness and health. All rules and regulations concerning the preparation of Halal food products must be applied from the first step of producing the raw materials

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/2040-4166.htm

Received 12 October 2012 Revised 21 June 2013 Accepted 7 July 2013

International Journal of Lean Six Sigma

Vol. 4 No. 4, 2013 pp. 389-408

q Emerald Group Publishing Limited 2040-4166

DOI 10.1108/IJLSS-10-2012-0011

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(on farms) to the distribution systems, so the Halal food supply chain starts from the farm and finishes with the end customers. To ensure the integrity of Halal food production, managing its supply chain needs extra attention.

Womack et al. (1990) emphasised that companies have to produce defect-free products, on time and at a reasonable price, otherwise they will fail. Companies have therefore changed into leaner operations with low inventory capacity, rather than using a mass-production method with high inventory. Cudney and Elrod (2011) pointed out that lean techniques have enabled companies to achieve significant economic benefits while improving quality, costs and cycle time. Accordingly, implementing lean strategies in the supply chain reduces waste and eliminates non-value added activities related to excess time, labor, equipment, space, and inventories across the supply chain (Corbett and Klassen, 2006). As supply chains increase in complexity and length, the implementation of lean practices is becoming ever more difficult.

Lean practices and related continuous improvement processes do not lend themselves to easy application in industries that have large batch processes, such as the food and beverage industries. Thus, this study aims to examine to what extent implementing LSC strategies is relevant in food industries.

Sim and Rogers (2009) showed that the degree of resistance to implementing new quality improvement systems is less often discussed. This study attempts to identify which barriers impede companies from implementing lean practices in the supply chains, with the emphasis on the Halal food industries.

This study has been divided into four sections. The first section deals with reviewing the related literature on LSC, with particular emphasis on the concurrent implementation of these strategic initiatives. Section 2 describes the survey methodology used to collect data in this study. Section 3 explains the results of the survey and discusses the findings in order to clarify the objectives of this research. The last section is dedicated to the conclusion and future research areas.

1.1 Lean supply chain Holweg (2007) highlighted that during the 1980s, with the growth in imports of Japanese products into western countries, their manufacturers started to show an intense interest in lean practices. This term implies less process and fewer activities, with high efficiency in fulfilling customer requirements. Worley and Doolen (2006) defined lean practices as “the systematic removal of waste by all members of the organisation from all areas of the value stream”.

Nowadays, the end customer puts pressure on the retailer to reduce the price, so supply costs need to be reduced to satisfy end customer requirements. Thus, cost reduction must be passed on from the suppliers of raw materials and components to the manufacturer, distributor, wholesaler and retailer. This means that it is necessary to involve the entire supply chain in reducing the final price. Since the suppliers and customers are in the same boat in wishing to meet end customer needs, all tools and techniques that help to reduce cost and waste should be applied among all suppliers and customers.

When lean thinking is applied across the all units of a supply chain (suppliers and customers) it represents a new way of thinking which can be called the lean supply chain (LSC) (El-Tawy and Gallear, 2011). The concept of LSC was developed by Lamming (1996), who defines lean supply as “[. . .] an arrangement (which) should provide a flow of goods, services and technology from supplier to customer (with associated flows

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of information and other communications in both directions) without waste”. Disney et al. (1977) pointed out that LSC creates value through reducing waste in the value stream chain. Waste can be defined as anything that interferes with the smooth flow of production (Macduffie and Helper, 1997) and can include overproduction (because of the lack of appropriate forecasting systems), waiting, conveyance, overload in transportation and inventory, over processing, defects and unused employee creativity in the LSCM (Wee and Wu, 2009; Mollenkopf et al., 2010). Finding waste and non-value added activities in a supply chain, or even a company, is a difficult task. Lehtinen and Torkko (2005) proposed six useful tools and techniques for finding waste among the supply chain:

(1) process activity mapping;

(2) supply chain response matrix;

(3) production variety funnel;

(4) quality filter mapping;

(5) demand amplification mapping; and

(6) value analysis time profile.

Nightingale (2005) defined a key feature of LSC as the supplier partnerships and strategic alliances. The important characteristics of LSC are eliminating duplication in process and activities, and continuous improvement among all units of a chain. Lehtinen and Torkko (2005) suggested that LSC is a strategy model for suppliers and customers relationships (Table I). According to this point of view, in implementing LSC, companies mostly focus on the total competitiveness of a value stream instead of competition between supply partners. Customers and suppliers are highly involved from the design phase of the product to the production phase. Firms reduce the number of their suppliers and try to be single- or dual-sourcing. Single-sourcing encourages suppliers to make more commitment in their contracts. Since operations are flexible, it is possible to produce a variety of products.

A comparison between LSC and conventional practices highlighted the numerous changes in operational and relational issues (Table II) when companies switch from a conventional operation to the LSC model (Nightingale, 2005). According to this illustration not only has the number of processes and operations been reduced dramatically, but also their structures have been changed to a clustered model, which makes it possible to pursue many parallel activities at the same time with lower resources.

Factor Lean supply characteristics

In competition No competition between the members of a supply chain: competition between supply chains

In sourcing decisions Number of suppliers is low and very stable. Single or dual sourcing In supply structure Tiered supply structure The role of suppliers High degree of supplier innovation in both new products and processes Supplier development High level of supplier coordination at each level of the supply structure Data interchange and interaction

Very frequent interaction at operational level, spreading throughout the network

Production principles Operational flexibility able to operate with fluctuations

Table I. Lean supply

characteristics

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In spite of the extensive benefits of lean practice, in reality not many companies are successful in its implementation (Balle, 2005; Papadopoulou and Ozbayrak, 2005). There are many reported problems and issues relating to these failures (Table III).

Table III shows that the barriers of “misunderstanding the concept and purpose of lean practices” and “lack of resources availability (time, skilled workers, and costs)” are reported most frequently in the lean literature. One reason behind this might be the cultural differences which arise in transition or translation of the lean principle and techniques during the implementation phases (Herron and Braiden, 2007; James, 2006). It is reported that lack of resource availability (time, skilled workers and costs) is a very serious obstacle in the adoption of lean practices in small and medium enterprises (SMEs)

Barriers Authors

Misunderstanding the concept and purpose of lean

Internal Bamber and Dale (2000), Crute et al. (2003), Bonavia and Marin (2006), Lee-Mortimer (2008), Wong (2009), Bhasin (2011), Stanleigh (2008), Rothenberg et al. (2001), Bhasin and Burcher (2006), Boyer and Sovilla (2003)

Lack of resource availability (time, expertise, financial)

Internal Crute et al. (2003), Melton (2005), Achanga et al. (2006), Bonavia and Marin (2006), Real et al. (2007), Wong (2009), Bhasin (2011), De Souza and Pidd (2011), Stanleigh (2008), Rothenberg et al. (2001), Bhasin and Burcher (2006), Boyer and Sovilla (2003)

Lack of top management support for change

Internal Bamber and Dale (2000), Worley and Doolen (2006), Stewart (2001), Lee-Mortimer (2008), Scherrer-Rathje et al. (2009), Bhasin (2011), De Souza and Pidd (2011), Stanleigh (2008), Boyer and Sovilla (2003)

Human barriers/resistance to change

Internal De Souza and Pidd (2011), Stanleigh (2008), Boyer and Sovilla (2003)

Company culture Internal Wong (2009), Stanleigh (2008), Boyer and Sovilla (2003) Functional and professional silos

Internal De Souza and Pidd (2011)

Disparate manufacturing environment

Internal Boyer and Sovilla (2003)

Lack of interest and commitment in lean by supplier and customer

External Stewart (2001), Scherrer-Rathje et al. (2009), Wong (2009), Bhasin (2011)

Mediocre consultant External Boyer and Sovilla (2003)

Table III. Lean practice implementation barriers

Characteristics Conventional model LSC model

Number and structure Many; vertical Fewer; clustered Procurement personnel Large Limited Outsourcing Cost-based Strategic Nature of interactions Adversarial; zero-sum Cooperative; positive-sum Relationship focus Transaction-focused Mutually-beneficial Selection criteria Lowest price Performance Contract length Short-term Long-term Pricing practices Competitive bids Target costing Price changes Upward Downward Quality Inspection-intensive Designed-in

Table II. A comparison between conventional and LSC models

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(Achanga et al., 2006; Bonavia and Marin, 2006; Real et al., 2007). Large companies are often more successful in implementing lean practices compared to SMEs, due to the lack of adequate financial support in SMEs (Achanga et al., 2006). This problem not only impedes SMEs in hiring skilled workers, but also in the provision of adequate training and innovation. They find it more difficult to provide appropriate tools and equipment during the implementation process. Lack of top management support for change is another key problematic issue reported in the literature (Table III). Since all activities in a company, from planning to implementation, are carried out under the supervision of senior managers, without their support implementing lean tools and techniques will fail (Worley and Doolen, 2006).

The lack of strong and intimate relationships with suppliers and customers can also cause serious problems in implementing lean practices (Table III). In addition, human barriers (Stanleigh, 2008), company culture (Wong, 2009), functional and professional silos (De Souza and Pidd, 2011), mediocre consultants (Boyer and Sovilla, 2003), and disparate manufacturing environments (Boyer and Sovilla, 2003) are recognised as other barriers to lean practice implementation, which can be assumed as arising from a lack of understanding of lean concepts or a lack of management support.

Since most of the barriers mentioned (Table III) are not reported when adopting lean in the supply chain, these questions arise: What are the important barriers in implementing LSC? Do the same barriers (Table III) impede companies when implementing LSC? While there are reports on LSC implementation barriers, this study aims to examine to what extent lean implementation barriers can be extended as LSC implementation barriers.

Investigating the barriers to lean practice implementation revealed that most of them are related to internal or external issues, so it is possible to categorise these barriers as either external and internal. Table III shows that compared to external barriers, internal obstacles are more frequently reported in the literature, and are more serious obstacles for companies to overcome in implementing lean systems successfully. Based on this understanding, the theory emerges that external barriers impede companies in adapting LSC to a greater extent than inter-organisational barriers (theory of external barriers). Therefore, one of the purposes of this study is to examine whether external barriers are more serious impediments than inter-organisational barriers when companies adopt LSC.

1.2 Halal food supply chain Tieman (2011) pointed out that “Halal” is a term that means permitted, allowed, lawful or legal by Shariah law, and is the opposite of “Haram” (forbidden, unlawful or illegal). “Shariah law is the orders of Allah which relate to the action of the people who are being accountable (mukallaf) by obligation” (Ms 1500:2009 (E), 2009). Although in Islam “Halal” covers every activity carried out by man, the main focus is on product consumption. This can be food, cosmetics or even pharmaceuticals, shampoo, soap and detergent. It is an obligation for Muslims to assure that the goods they consume are a true manifestation of Islamic principles, called Halaan Tayyiba. In the food industry Halal and Tayyib refer to all food and beverage products which are not only produced according to Islam principles (Shariah, Islamic law) but are also wholesome and good (World Halal Forum, 2009). Halal food products do not contain:

. any parts or products of non-Halal animals such as pork;

. any parts or products of Halal animals that were not slaughtered according to Shariah law (Islamic law);

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. any ingredients that are Najs (unclean defined by Shariah law); physical, chemical, or biological/microbial hazards; and

. any human parts or derivatives.

In addition, a Halal product cannot be prepared, processed or manufactured using equipment that is contaminated with substances that are Najs (unclean defined by Shariah). During its supply, it should be physically separated from any other product that does not meet the requirements stated above, or any other things that have been decreed as Najs by Shariah (Shafie, 2011; World Halal Forum, 2009; Tieman, 2011).

According to Shariah law all land and aquatic animals are not Halal and some of them are permitted to be eat. Animals that live both on land and water such as crocodiles, turtles and frogs are not also Halal. Besides, all types of plants and plant products and their derivatives are Halal except those that are poisonous, intoxicating or hazardous to health. On the other hand, all kinds of water and beverages are Halal as drinks except those that are poisonous, intoxicating or hazardous to health. All Halal foods that are stored, transported, displayed, sold and/or served shall be categorised and labelled Halal and segregated at every stage in the supply chain. Moreover, transportation vehicles such as bonded truck shall be dedicated and appropriate to the type of the Halal food and satisfy hygiene and sanitation condition. Halal food shall be suitably packed. The raw materials of Halal food package shall not be Najs, they shall not be prepared, processed or manufactured using equipment that is contaminated with things that are Najs; packaging design, sign, symbol, logo, name and picture shall not be misleading and/or contravening the principles of Shariah law. In addition, Advertising Halal foods shall not contravene with the principles of Shariah law and shall not display indecent elements which are against Shariah law (Ms 1500:2009 (E), 2009).

Since the Halal integrity of food and beverages is a result of the various processes and activities in the supply chain, a supply chain approach is important which guarantees this Halal integrity at the point of consumption (Tieman, 2011). Muslims want assurance that the food and beverage products they consume are Halal, so certain standards in food production, preparation, handling and storage must be implemented (Tieman, 2006). Hence, compared to the non-Halal food supply chain, in the Halal food supply chain there are more standards and regulations that need to be considered.

1.3 Food industry There is a general understanding that continuous improvement methods such as lean manufacturing and LSC are not easily applicable in those industries that have large batch processes, such as food industries. Arlbjorn et al. (2011) pointed out that lean supply is highly suitable for those industries in which the demand is highly predictable, the variety of products is low, and the product life cycle is long. Normally, in the food and beverage industries demand is volatile, the products are varied, and the shelf life is short.

LSC tools and techniques help companies to not only reduce their wastes and non-value added activities, but also increase their overall performance (Cudney and Elrod, 2011). There is no doubt that each company seeks performance improvement in its processes and activities, and the food industries are not an exception. Hence, this study aims to examine to what extent implementing LSC in the food and beverage industries is necessary and applicable.

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Malaysian Government aims to establish Malaysia as a global Halal hub for the promotion, production and transportation of Halal products to Muslim countries all over the world (Nik Maheran et al., 2009). Malaysia is a leader in Halal food production among Islamic countries. It has attained MS 1500:2004 Standard, the first Halal Standard to be applied to the food industry (Nik Maheran et al., 2009). In addition, the Halal food supply chain covers the entire value chain from seed to fork in Malaysia. There is therefore a need to understand to what extent Halal foods are involved in continuous improvement approaches such as LSC, to improve supply chain performance. Therefore, Halal food industries in Malaysia have been used as the population in this study.

Finally, the objectives of this study can be summarized as: . to what extent implementing LSC strategies is relevant in food industries; . to what extent Halal foods are involved in adopting LSC; . to what extent lean manufacturing implementation barriers can be extended as

LSC implementation barriers; and . to examine whether external barriers are more serious impediments than

inter-organisational barriers when companies adopt LSC.

2. Research method In this study, the survey method was used to collect the required data. In order to achieve the objectives of the study, Malaysian Halal food companies were selected as the target population. The list of companies encompasses bakeries, fruit and vegetable, beverage, seafood, dairy, grains and oilseeds, beef and chicken products and other food components. The food companies involved in this study ranged from small to large, in order to get a holistic view of LSC implementation in the Halal food industry.

A questionnaire was developed based on all lean and SCM implementation requirements and practices. To increase questionnaire reliability, sections of the questionnaire were developed based on the research of previous studies by Halldórsson et al. (2008), Meehan and Muir (2008), Bhasin (2011), Wong (2009), De Souza and Pidd (2011), Norani et al. (2011) and Scherrer-Rathje et al. (2009). It also took into consideration other sources in literature and previous empirical studies, with the emphasis on barriers and problematic issues in lean and supply chain management implementation. Moreover, to focus more on the Halal food supply chain issues, the opinions of experts were deployed in designing the questions.

Throughout the questionnaire’s construction, discussions were held with three food experts in the field of lean and SCM, to check on the clarity of the questions and the appropriateness of the proposed scale. These experts were chosen based on their willingness to participate and their level of experience (more than ten years) in implementing lean and SCM initiatives in the food industry. The comments and feedback given were very useful in enhancing, amending and improving the questionnaire. Based on their experience some questions were added to the barriers section of the questionnaire, relating to:

. insufficient monitoring and control of the suppliers’ delivery time;

. lack of supply chain integration;

. technical barriers;

. failure of past lean projects;

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. lack of baselines and poor measurement systems;

. lack of understanding and visibility in the desired marketing activities;

. lack of clear responsibilities of roles within the supply chain management;

. lack of understanding and recognition of production constraints and management, as well as capacity planning;

. reluctance to exchange information; and

. market competition and uncertainty.

The experts also pointed out that it is very important to understand the necessity of implementing LSC in those companies which have not yet attempted to apply it. They proposed some additional questions in order to identify to what extent companies need to apply lean and LSC (Table IV). According to the experts’ opinions, those companies that faced these issues more often, need to apply lean to a greater extent in their supply chain.

Finally, a questionnaire consisted of three parts:

(1) background information on the firm (year of establishment, ownership, number of employees and quality system certification);

(2) the barriers to LSC implementation; and

(3) respondent’s information ( job title, department and years of service) was designed.

After designing a questionnaire it is very important to validate its items and questions. Shahsavar and Tan (2012) highlighted that a questionnaire can be validated through three

Overall pressures Need to reduce costs? Overtime costs stubbornly high? Producing too much secondary product, rework or scrap? Under pressure to reduce prices? Under pressure to buy additional machinery? How well is your existing capacity really being utilised? About to sign that order for a building extension or move to bigger premises? Just how well is current floor space utilised?

Operational pressure Are product changeovers a problem? Too much downtime? Difficulty in deciding priorities? Finding it difficult to retain and train staff? Customers demanding greater varieties of products and shorter lead time? Output unpredictable? Wasting valuable time firefighting the same old issues? Got some data but not enough really useful information? You have a vision of how things should be but cannot see how to get there?

Wastes Waste of over-production Waste of defects (errors, mistakes and rework) Waste of inventory Waste of over-processing Waste of transportation Waste of waiting Waste of motion (movement of people that does not add value) Waste of un-utilized people (employees not leveraged to their own potential)

Table IV. Indicators of a need for lean

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steps; item judgment, pilot test, and questionnaire assessment. In this study, at the first step of validation, a panel of experts (who have more than ten years experience in implementing lean and supply chain) reviews the questionnaire items to evaluate the clarity, readability and content validity of these items. In this regard, Delphi Technique as the most common methods of gaining experts’ knowledge, ideas, and agreement was used. Each panel expert reviews the questionnaire items independently in two rounds and evaluate the clarity, readability and content validity of these items. After each round, the authors provide an anonymous summary of experts’ feedback and reasons they provided for their judgments to develop a revised questionnaire items. However, in each round the authors accept or reject the experts’ advice to retain, remove, synthesize or change items. The summary and revised items were returned to experts for another round of checking. The panel applied the same procedure on the revised items, and the authors make amendments accordingly. The process was stopped after the expert panel confirmed acceptance of the revised questionnaire and no more changes to the items.

The second step of questionnaire validation was to pilot the revised questionnaire. Shahsavar and Tan (2012) revealed that an appropriate sample size and subjects should be used for pilot testing a questionnaire and the sample should be selected from the population of interest for the study. So, three senior managers who had more than ten years experience in Halal food companies were asked to answer the questionnaire questions. According to the participant’s feedback a few small changes have been applied on the questionnaire style.

The last and most fundamental step of questionnaire validation is questionnaire assessment. Authors evaluated and analyzed the performance of questionnaire on each item by using item correlation to assess correlationship among items. Oppenheim (1992) highlighted that the coefficient a can be used to measure the internal consistency or reliability for questionnaire items. Therefore, the results proved that the survey instrument had high internal consistency with Cronbach’s a values . 0.9, and therefore was highly reliable. The normality test was applied on all data and shows that all data was normally distributed.

The questionnaire was distributed among Halal food manufacturers which participated in food festivals in 2011 and 2012, held in Kuala Lumpur and Penang in Malaysia. Companies from all over Malaysia participated in these festivals. Since in this study the population is limited to Halal food companies in Malaysia, it was difficult to collect many responses. From those Halal food companies which asked to participate in this study, just 61 companies answered the questionnaire appropriately. Based on previous studies on lean and SCM implementation (Norani et al., 2011; Meehan and Muir, 2008) this response rate is acceptable. The personnel selected to answer the questionnaire were managing directors, planning or strategic managers, production managers, marketing or sales managers, supply chain managers, quality managers and engineering managers who might be involved in implementing LSC in each firm. The respondents were asked to participate in a face to face interview and answer the questionnaire. Face to face interviews make it possible to clear up all ambiguities and make the questionnaire fully understandable.

3. Results and discussion The majority of participating companies (Figure 1) are local companies, with few foreign companies or joint ventures – in Malaysia the production of Halal food products is most popular among local companies.

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Figure 2 shows the classification of company size based on the number of full-time employees (according to the SEMcorp 2012 definition). The highest percentage of participating companies (55.7 percent) is classified as small companies with less than 50 full-time employees. The percentages of medium (23 percent) and large (21.3 percent) companies are almost identical. This reflects that Halal food production is mainly the domain of small companies.

Respondents were asked to highlight their products from a list which included bakery, dairy, fruit and vegetable, seafood, beverage, beef products, grains and oilseeds, chicken products, and others. This list was prepared from the most popular Halal food products in Malaysia, which featured more frequently on Malaysian Halal food websites. Figure 3 shows the range of product types produced by respondents’ companies. The highest number of the respondents were involved in beverage production (29.5 percent), followed by fruit and vegetable (11.5 percent), bakery (9.8 percent), seafood (4.9 percent), beef products (4.9 percent), grains and oilseeds (4.9 percent), dairy (3.3 percent), with chicken products making up only 1.6 percent. 29.5 percent of companies indicated that they produced products other than those listed. These products were mainly chocolate and jelly.

Regarding quality system certification (Figure 4), 19.7 percent of respondents did not have a quality certificate. Examining the results in more detail, it was found and shown in Figure 4 that more than 67 percent of respondents were certified by HACCP. Around 32.8 percent were certified by ISO9001 and 19.7 percent certified by ISO22000. Other

Figure 1. Type of ownership

88.6%

4.9% 6.6%

local

foreign

joint venture

Figure 2. A number of employees

23%

21.30%

55.70%

Small

Medium

Large

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types of quality certificates were registered by a small number of participants. Compared to 44.2 percent of responding companies that had one quality certificate, only 4.7 percent had four quality certificates. So it can be seen that the number of quality certified companies in Halal food industries in Malaysia is very low – a matter which requires attention. A reason behind this situation might be that the majority of Halal food companies are small. Typically, in Malaysia small firms are registered as sole proprietorships and are managed by the owner (Karimikia, 2012). Since development of the business is determined by the owner, decision making on implementing any new system is mostly done by him. These businesses often have limited resources (Karimikia, 2012; Rahman and Tannock, 2007) especially new starts-up which are highly dependent on the ability of the owner to generate resources. Since any change normally requires additional capital or resources, these firms are not successful in implementing new systems. It is noteworthy that the structure of these firms is often flat and informal, with employees able to function as generalists because there is no clear demarcation of tasks. Hence, if the owners intend to implement a new system it is not such a difficult task, since they have more flexibility to adapt to changes in the environment due to their size and informal structure.

The results of this study reveal that the majority of participating companies (70.5 percent) had not implemented LSC. It is worth examining to what extent implementing LSC among Halal food companies is affected by the implementation of quality systems, type of ownership, size of company and the type of product. The authors therefore ran more analysis and identified that (according to the x 2-test) in contrast to company size; the other issues mentioned do not significantly affect LSC implementation

Figure 3. Type of products

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in Halal food companies. In contrast to these findings Kojima and Kaplinsky (2004) conducted a study in South Africa and identified that there was a significant relationship between implementing lean practice and company ownership type.

According to a x 2-test at the 0.05 confidence levels, there is a significant association ( p-value ¼ 0.023) between the number of employees and implementing LSC among Halal food companies. These results show that the rate of LSC implementation increases as the number of employees increases. This finding is in accordance with the previous studies of Bonavia and Marin (2006), Shah and Ward (2003) and Wong et al. (2009) which found that implementing lean practices is related to company size. Large companies are likely to implement lean concepts due to the resources they have available, such as strong financial management and workforce intellectual capital.

To examine to what extent implementing LSC among food industries is necessary, a three-cluster solution was derived from a hierarchical cluster analysis. Those factors which are mentioned in Table III have been used in this analysis. In this analysis the Squared Euclidian distance between variables and Ward’s method of optimizing the minimum variance within clusters were used. The hierarchical approach and Euclidian distance were selected because of their straightforward interpretation and dominance in the frequency of applied use (Field, 2009). A similar method was also used by Shah (2002) and Norani et al. (2011) in discussing lean configuration. Table V shows the result of cluster analysis and mean scores. The solution produces three distinct groups: little need to apply (group A), medium need to apply (group B), and high need to apply (group C). The first group (A) contains 72.1 percent of all firms and is characterised by low mean values for all indicator variables. This suggests that the firms forming this cluster observe a small number of needs for lean indicators (one to eight indicators) and for this reason they are categorised as having little need to apply LSC. The second group (B) consists of 14 percent of all firms, and is characterised by having moderate mean values for each of the indicator variables. This group is categorised as having a medium need to apply LSC system because they observe ten to 14 need for lean indicators. Finally, the third group (C), comprising 14 percent of all firms, are classified as having a high need to apply LSC because they have high mean values of each indicator variable and they observe 19-23 of the need for lean indicators.

The need to apply LSC indicators are classified in terms of overall pressure, operational pressure, and waste (Table IV). Table V shows the mean scores of these classifications in the three clusters (A, B, C). In cluster C, those companies highly in need of lean practices, operational pressure has a high mean score. This suggests that implementing lean practices helps companies to deal with operational pressure.

It is interesting to identify whether or not domestic issues have any influence on the need to apply LSC. According to the x 2-test, implementing quality systems, type of

Mean score Cluster A Cluster B Cluster C

Little need to apply Medium need to apply High need to apply

Overall pressure 2.3 4.5 5.3 Operational pressure 1.1 5.5 8.8 Wastes 0.5 2.0 7.3

Table V. Mean scores of clusters

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ownership, size of company and type of product produced do not have any influence on the formation of clusters A, B, and C. This indicates that there is no relationship between domestic issues and the need to apply LSC among Halal food companies. This means that domestic issues are not the reasons behind the need to implement LSC among food companies. Since the majority of these companies are small and local, the lack of a relationship between type of ownership and size of company with clusters A, B, and C cannot be a surprise. It can be concluded that irrespective of product produced and quality systems in place, companies might still need to apply LSC at the same level of urgency.

These results suggest that those companies which fulfill more than 20 indicators (cluster C, Table V) need to implement lean practices in their firms very quickly. Since implementing lean practices has many benefits, those firms that fulfill less than 18 indicators (cluster A and B, Table V) can make a plan to apply lean in the future.

It is necessary to identify and understand any resistance or barriers to implementing any new change in any company. Norani et al. (2011) and Stanleigh (2008) highlighted that dealing with resistance to change requires a lot of risk and hard work. Participating companies were therefore asked what kinds of barriers deterred them from applying LSC, and the problematic issues faced during implementation (Table VI).

This study examined what effect quality systems, ownership type, company size, and type of product produced had on emerging barriers to implementing LSC. The results revealed that according to the x

2 -test, in contrast to ownership type, the other issues

mentioned do not significantly affect LSC implementation in Halal food companies.

Barriers LSC firm (group 1)

Not LSC firm (group2)

Human barriers/resistance to change 2.39 2.49 Lack of understanding of LSCM concept 2.33 2.65 Functional and professional silos 2.00 2.40 Cost of implementation 2.44 2.40 Disparate manufacturing environment 2.22 2.26 Lack of time 2.33 2.35 Insufficient monitoring and control of the suppliers’ delivery time 2.22 2.05 Lack of supply chain integration, especially with trade marketing and distribution teams 2.06 2.09 Technical barriers 2.28 2.28 Company culture 2.33 2.26 Lack of management support 2.22 2.16 Lack of skilled workers 2.44 2.37 Failure of past lean projects 2.06 2.05 Lack of baselines and poor measurement systems 2.22 2.12 Lack of understanding and visibility of the desired marketing activities 2.00 2.00 Lack of clear responsibility lines inside supply chain management 2.06 2.00 Lack of understanding and recognition of the production constraints and management, as well as capacity planning 2.06 1.91 Lack of customer awareness of LSCM practices 2.56 2.74 Mediocre consultancy 2.22 2.44 Reluctance to exchange information 2.56 2.53 Market competition and uncertainty 2.67 2.58 Poor supplier commitment 2.56 2.63

Table VI. Barriers to LSC implementation

in Malaysian Halal food companies

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According to x 2-testing at the 0.05 confidence levels, there is a significant association ( p-value ¼ 0.07) between type of ownership and emerging barriers among Halal food companies. These results show that local companies have faced more barriers compared to foreign companies and joint ventures. A reason for this might be that the majority of local companies are small. As was frequently mentioned in the literature, small companies face more problematic issues in implementing quality systems.

LSC firms (Table VI) suffer more (with mean score 2.67) from market competition and uncertainty during the implementation phase. Although implementing LSC brings many benefits (Cudney and Elrod, 2011) for companies in making them more competitive, application takes time and expense. In today’s fierce global market, many companies focus more on market needs, instead of allocating their resources (time, money and employees) on implementing LSC. Companies need to know how they can implement LSC, in order to improve their competitive position in the market. So, a poor understanding of the concept of LSC prevents them from implementing it successfully.

Lack of customer awareness of LSC practices, reluctance to exchange information and poor supplier commitment are secondary important barriers to implementing LSC among lean firms (Table VI). A reluctance to exchange information has been recognised as an important barrier to implementing SCM in other studies (Naude, 2009; Yan, 2010; Su et al., 2008; Manzouri et al., 2010; Rahman et al., 2011). Since companies consider that information provides power and status, they do not tend to share it across the supply chain. A lack of trust among supply chain partners is another important reason for this. Suppliers and customers are the most important parts of any supply chain, so without their full cooperation implementation of LSC processes can fail. Similar to these results Stewart (2001), Scherrer-Rathje et al. (2009), Wong (2009) and Bhasin (2011) emphasise the important role of suppliers and customers in implementing lean manufacturing systems.

The third sets of important barriers to LSC implementation in lean firms are the cost of implementation and lack of skilled workers. These are common barriers to implementing lean manufacturing systems, as identified by many researchers (Bonavia and Marin, 2006; Real et al., 2007; Wong, 2009; Bhasin, 2011). There is no doubt that implementing changes in companies requires financial support, in order to purchase new equipment and even hire expert employees. Along with company size, lack of management support is the key cause of financial barriers (Table I). Many managers are unwilling to allocate financial resources on changes when the outcomes are unclear. In this study, LSC firms also identified lack of management support as an important barrier to LSC implementation.

Another important barrier highlighted by respondents was the human barrier. Implementing new systems brings many changes in companies, but people do not like change. They like to follow their old methods with the old equipment, and so they resist new systems and methods. Since all activities are carried out by people, employee resistance can cause new systems to fail. Many other researchers have also recognised human resistance as an important barrier to implementing lean manufacturing systems (Table I).

Lack of understanding of the LSCM concept, lack of time and company culture was mentioned by lean firms as important barriers, with a mean score of 2.33 (Table VI). This suggests that although these firms are implementing LSC, as they do not fully understand its concept they might be confused by many of its regulations and techniques. Many previous researchers identified that poor understanding of the lean manufacturing concept hinders firms in full implementation (Table I). A reason behind

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this barrier might be the lack of certified consultants in implementing LSC. Companies need consultants at all stages of implementation to overcome their problems. Table VI shows that Halal food companies highlight this problem (mediocre consultants) as a barrier to applying LSC. Functional and professional silos, with a mean score of 2, were recognised as the least significant barrier among lean firms (Table VI). Reviewing the related literature revealed that it is not a common barrier to implementing lean manufacturing systems.

In non-LSC firms, lack of customer awareness of LSCM practices (mean score 2.74) is identified as the most serious barrier to implementing LSC (Table VI). The second most important barriers were identified as a lack of understanding of the LSCM concept (mean score 2.65) and poor supplier commitment (mean score 2.63). Following these in importance come the barriers of market competition and uncertainty (mean score 2.58), reluctance to exchange information (mean score 2.53) and mediocre consultancy (mean score 2.44). It is interesting that these are the same problematic issues as those suffered by LSC firms at a high level during LSC implementation. It seems that there is a similarity between the two groups (LSC and non-LSC firms) in the barriers they face when implementing LSC. To examine this similarity an independent t-test analysis was used. According to t-test analysis at the 0.05 confidence level, there is minimal differentiation ( p ¼ 0.831) between LSC companies and non-LSC companies in the barriers they face. These results suggest the possibility that LSC firms in the Halal food industry in Malaysia are not completely successful in implementing LSC.

These results also imply that all the barriers to lean manufacturing implementation reported in the literature (Table I) are also faced by Halal food companies implementing LSC. Since there have not been many studies on LSC implementation barriers, managers and practitioners can adopt lean manufacturing implementation barriers as LSC implementation barriers. As companies implementing lean manufacturing systems suffer more from internal barriers, it is important to identify to what extent these barriers are related to inter-organisational issues or external issues.

In order to further define barriers, they are categorised as internal and external (Table VI). The mean scores of external barriers in both LSC and non-LSC firms (Table VII) are higher than those of internal barriers, which suggests that in implementing LSC external barriers create more problematic issues than inter-organisational barriers. This shows that managing internal issues is easier than dealing with external issues when implementing LSC. A reason for this might be that all internal processes and activities are

Mean score Barriers Lean companies Non lean companies

Internal 2.2 2.2 External 2.5 2.6

Table VII. Mean score of internal

and external barriers

Cluster D Cluster E Cluster F Barriers Low barriers Medium barriers High barriers

Number of companies 18 16 27 Table VIII.

Barrier cluster

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under the control of senior managers in a company, whereas external issues relate to other companies with different managements. Implementing those processes which mainly relate to other companies requires a two-way trustworthy relationship. Since LSC tools and techniques should be implemented across all the units of the supply chain, lack of cooperation on the part of suppliers and customers can cause implementation to fail. Similar to these findings, Cudney and Elrod (2011) identified that the external relationship with supply partners plays an essential role in implementing LSC. So, in contrast to implementing lean manufacturing systems, which mostly suffer from inter-organisational barriers (Table I), in managing and implementing LSC, more companies suffer from external issues.

In order to examine the magnitude of these barriers, a three-cluster solution was derived from a hierarchical cluster analysis of all barriers (Table V). In this analysis the squared Euclidian distance between variables and Ward’s method of optimizing the minimum variance within clusters have been used (Table VIII).

The solution distinctly shows low barriers (cluster D), medium barriers (cluster E) and high barriers (cluster F). This suggests that the majority of companies face a high number of problematic issues in implementing LSC. Table IX shows that the highest percentages of LSC and non-LSC firms belong to Cluster F, which has the highest level of barriers. This confirms the previous results of this study, which highlight that the intensity of barriers is almost the same in LSC and non-LSC companies, suggesting that LSC firms are not successful in implementing LSC.

4. Conclusion Reviewing the related literature highlighted the fact that implementing lean practice systems in food companies is complicated. There was a gap between theory and practice, raising the question to what extent implementing these systems among food industries is useful. The results of this study show that more than 70 percent of Halal food companies in Malaysia belong to cluster A, which fulfilled only a few indicators (Indicators of a need for lean; Table IV). Thus, these results are consistent with previous findings and suggest that food companies do not really intend to apply LSC yet. However, implementing lean practices in the firms in cluster C can overcome many of their operational problems and improve their overall performance.

Since there has been little practical research, especially on the barriers to LSC implementation, it was worth examining to what extent lean practice barriers (such as lean manufacturing implementation barriers) impede companies when applying LSC too. The result of this study highlights that a majority of barriers which impede companies in implementing lean manufacturing also hinder LSC implementation. Hence, these findings imply that it is possible to adopt barriers to lean manufacturing implementation as barriers to LSC implementation.

The results of this study confirm the theory of external barriers and highlight that companies suffer more from external issues when adopting LSC. This study does not

Cluster D (%) Cluster E (%) Cluster F (%)

LSC firms 33.3 22.2 44.4 Non LSC firms 27.9 27.9 44.2

Table IX. Barrier cluster

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suggest that companies focus only on external issues when implementing LSC, but that they should put more emphasis on external barriers than internal issues. A trustworthy, cooperative relationship with supply chain partners can overcome many of these external barriers. Trust Enterprises are a good example of this relationship – in this supply chain companies share their information, risks and rewards.

From this study a number of interesting findings were revealed that require further research. First, since LSC firms are at the first stage of LSC implementation (Table VI), there is a need to conduct another study in near future to understand to what extent these firms improve their LSC implementation. Second particular area is to identify to what extent LSC tools and techniques are applied among Halal food companies in Malaysia, and why those companies are not successful in implementing LSC. Third area that requires further exploration is the examination of barriers to implementing lean practices, and the possibility of adopting them to LSC. Moreover, it is very important to identify how companies can overcome these barriers and implement LSC successfully. The samples chosen for this study consisted of respondents from Halal food industries in Malaysia. There is a compelling opportunity for future researchers to repeat this study, not only in other Malaysian industries but also in other Islamic countries.

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Corresponding author Malihe Manzouri can be contacted at: [email protected]

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