Elevating Halal Procurement: from compliance to strategy

The procurement function plays a crucial role in the sourcing of halal certified raw materials, ingredients and additives, packaging materials, transportation, warehousing, etc. Halal has conventionally been addressed by the industry as part of a product specification, to ensure compliance of raw materials, ingredients, and primary packaging materials. As halal is going through an evolution, moving away from a product approach, towards a halal supply chain and value chain, brand owners need to address the halal procurement function at a more strategic level. Unfortunately, there has been little attention paid by brand owners to bring halal out of the purview of the internal halal committee to a more strategic level. In fact, I am of the opinion that halal procurement is one of the most important building blocks of a corporate halal value chain. Hence, the topic of halal procurement as a critical building block of a halal value chain should be on the radar of brand owners serving Muslim markets.

Impact of halal for the procurement strategy

The Kraljic portfolio matrix is an important tool used by procurement professionals to crafting procurement strategies for products, services and works purchased. In the Kraljic portfolio matrix commodities are classified based on the purchasing impact on the financial result (measured in costs of purchase of a certain commodity category or impact on product quality) and supply risk (measured against criteria such as number of potential suppliers, availability of supply, competitive structure in supply markets).

By mapping every purchase commodity into one of four categories, organisations can shift from a “one-size-fits-all” purchasing approach to a targeted strategy that optimises costs and protects operations.

The Four Strategic Approaches

• Strategic Items: High value and high risk. These require Partnership and long-term collaboration because they are vital to the product and difficult to replace.
• Leverage Items: High value but low risk. These allow for Competition; because there are many suppliers, companies can use their high spending power to negotiate the best prices.
• Bottleneck Items: Low value but high risk. These demand Security of Supply; the goal is to ensure you don’t run out of these niche items, even if it means holding extra inventory or against higher purchase costs.
• Non-Critical Items: Low value and low risk. These focus on Efficiency; the objective is to spend as little time and administrative effort as possible on routine supplies.

Based on the location in the matrix, commodity strategies are formulated. Now the question is how does halal impact the traditional commodity strategy? The implication of halal for the purchasing portfolio matrix and the supply management strategy has two possible effects. First halal has impact on the financial result for producers of halal sensitive products, namely: “Is the product animal based?” (yes/no). Examples of animal based products are raw meat, processed meat, ingredients/additives derived from animals (like gelatine) and processed products that contain these items. If the product is animal based it would move a traditional routine product to leverage or a bottleneck product to strategic. Second, halal has impact on the supply risk: “Is the supply chain partner based in a non-Muslim country?” (yes/no). Partners in non-Muslim countries that offer halal compliant products and services have invested in halal certification/compliance, are specialised and are often not well controlled and supported by its government in terms of its halal compliance. This requires a more intensive relationship with these suppliers, which moves a traditional routine product to bottleneck or a leverage product to strategic for non-Muslim countries.

Halal leads to stronger partnerships with suppliers (strategic and leverage products) and adopting various strategies to secure continuity of supply (bottleneck products). This would position a halal procurement strategy as so-called “relational integration”, where long-term win-win relationships are maintained with a limited number of suppliers.

Advancing halal procurement maturity by an organisation

There should be an effective alignment between halal policy, procurement strategy and purchasing process. To make this a reality it is important to advance the halal procurement maturity of your organisation. In the first stage, which I call “viewing halal compliance as an opportunity” (read: problem), it is the challenge to become pro-active in halal compliance. In this phase it is about obtaining and protecting halal certification status of products and/or services produced by the company. Important elements in here are the halal policy, internal halal committee, and halal assurance system. The purchasing opportunities are the halal compliance of supplier base and inducing suppliers to obtain halal certification.

In the second stage, which I call “making supply chains halal”, it is about supporting a transition to a halal supply chain. A cross-functional team is established tasked to identify, select and manage suppliers of halal relevant product groups. A second function of this cross-functional team is to harmonise halal standards of suppliers and ensure halal storage and transport clauses are part of contracts with supply chain partners. The third function of the cross-functional team is to identifying and implementing any changes required in the procurement strategy and purchasing process of the company.

At the third stage, which I call ”making value chains halal”, it is about the transition of the business value chain towards a corporate halal value chain. During this stage the cross-functional team becomes a key driver in the alignment of the halal value chain of an organisation with its supply chain partners. Among other’s this addresses reviewing contract clauses related to Islamic finance and takaful requirements, sustainability, halal branding & marketing guidelines, etc.

Halal procurement key performance indicators

To guide organisation in an effective alignment between halal policy, procurement strategy and purchasing process, key performance indicators are important. I would like to introduce two halal procurement key performance indicators, namely: halal procurement maturity and halal compliance of supplier base.

Halal procurement maturity measures the main position of an organisation in the halal procurement maturity (stage 1: viewing halal as an opportunity; stage 2: making supply chains halal; stage 3: making value chains halal). Companies can use the halal procurement maturity as goal setting, for example completion of stage 1 by the year 2027, stage 2 by 2030, and stage 3 by 2035.

Halal compliance of supplier base measures the number of suppliers that are halal certified versus the total number of suppliers. This is identified for the halal commodity categories (like raw materials, packaging, logistics, food processing equipment, insurance, etc). For each supplier it needs to be determined if they are halal certified with a valid and recognised halal certificate. This allows organisations to have a quick overview of the biggest halal compliance issues for the halal commodities. Companies can use this to priorities supplier development and measure progress achieved by the cross-functional team.

Conclusion

In an era where halal is evolving from a simple product specification into a comprehensive value chain requirement, the role of procurement has never been more critical. By integrating halal requirements into the Kraljic Matrix, organisations can move beyond a reactive “compliance” mindset and toward a proactive, strategic framework that actively manages supply risk and strengthens supplier partnerships.

To successfully navigate this transition, brand owners must advance their halal procurement maturity. This involves moving from basic certification efforts to a fully integrated approach that aligns halal policy with the entire purchasing process. By implementing clear Key Performance Indicators (KPIs)—such as measuring halal procurement maturity and the halal compliance of its supplier base—companies can ensure their supply chains are not only compliant but also resilient and competitive.

Ultimately, elevating halal procurement to a strategic level is no longer optional; it is a fundamental building block for any organisation aiming to lead in the global Muslim market and build a robust, sustainable halal value chain.

About the Author

Dr. Marco Tieman is the CEO of LBB International, a supply chain strategy consultancy and research firm, advising companies and governments on procurement, production, and supply chains. In 2025 he co-founded HSC Alliance, with the mission to build an international halal supply chain network. He is an Adjunct Professor with Universitas Ary Ginanjar (Indonesia) and Taylor’s University (Malaysia) as well as a Senior Fellow with IPMI International Business School (Indonesia). He is the organising chairman of LogiSYM Indonesia and Malaysia. He is the author of ‘Halal Business Management: A Guide to Achieving Halal Excellence’.

The article was published in the LogiSYM Magazine of April 2026 (https://magazine.logisym.org/elevating-halal-procurement-from-compliance-to-strategy/)