AN EMPIRICAL RESEARCH ON RELATIONSHIP BETWEEN DEMAND,

PEOPLE AND AWARENESS TOWARDS TRAINING NEEDS: A CASE STUDY IN

MALAYSIA HALAL LOGISTICS INDUSTRY

*Khazizul Maulod Bin Pahim, **Sabariah Jemali and ***Syed Jamal Abdul Nasir Syed Mohamad *Author Affiliation 1 : Malaysia Institute of Transport (MITRANS), Shah Alam Malaysia

**Author Affiliation 2 : Malaysia Institute for Supply Chain Innovation (MISI), Shah Alam Malaysia ***Author Affiliation 3 : Faculty of Business Management, UiTM, Shah Alam Malaysia

Abstract – Recently, the Halal industry has a huge potential for market demand. The rising of Halal has made the consumers to think twice before using any product because it is proven that Halal product can offer good quality, cleanliness, hygienic, safety, authentic and nutritious. Halal has created awareness to the consumers and supplier to use or supply the good according to Halalan Thoyyibban principle. Many logistics companies in Malaysia have adapted Halal in their operation. However, the lack of employees, skills and experience become the major problem to operate Halal in their operations. There are not enough skills and experience workers who can handle the consignment according to the Halal procedure. Hence, training in the Halal logistics industry professional is crucial as the lack of professionalism in the transport and logistics process in the supply chain may cast doubts on the Halal status of a product. The purpose of this research is to present the relationship between the training needs in Halal logistics industry in Malaysia and investigates its relationship with demand, people and awareness. The data collection instruments used was a questionnaire which was administrated to a total sample of 162 respondents from the middle management level in the logistics companies who have the Halal certification by Jabatan Kemajuan Islam Malaysia (JAKIM) or Halal Industry Corporation (HDC). Sample selection was based on purposive sampling. The analysis involved statistical methods using Predictive Analytics Software (PASW) 18.0 such as reliability and validity test and multiple regressions. The result indicated that training needs in Halal logistics industry are related to demand, people and awareness which to explain the significant influence to the Halal logistics industry. Keyword- 3PL, Halal Logistics, Logistics Training, Training Needs and Halal Industries.

I. INTRODUCTION As a rapidly expanding business, the Halal industry is

now reaching 1.8 billion consumers globally and its estimated value is USD 2.1 trillion. The interest and demand for Halal certified services and products continue to rise

throughout the world because Halal is not just religious obligations but also has the powerful market forces whereby the demand for Halal food or product keeps rising significantly [1].

The emerging of awareness and demand for the Halal products and services in Malaysia and globally started in early of 2000. However, from the website and newspapers indicated that the kick-start for Halal started in 2005 due to the organization of many Halal forums, dialogues, seminars and conference such as Malaysia International Halal Showcase (MIHAS), World Halal Forum (WHF), World Halal Research Summit and International Halal Food Conference (IHFC) held during that period.

The training of Halal understanding and concepts in an organization is very vital in order to develop not only the quantity but also the quality of human capital, i.e. one that is skilled and knowledgeable. The government has spent a huge number of investments for training in Malaysia. In 2008 alone, the financial assistance approved by the Pembangunan Sumber Manusia Berhad (PSMB) for the total freight logistics is RM 35,966,789 [2].

There is no denying that training plays the important role in order to boost the logistics industry as stated in the Industrial Master Plan 3. It also emphasized that one of the strategic thrusts in the logistics industry is to ensure adequate supply of competent workforce to meet the long term requirement of the industry. The IMP3(2006-2010) also stated that the capabilities of the workforce will be enhanced through other re-training and long-life learning of the personnel to meet short and long-term needs of the industry in specific areas of technical, commercial and operation skills [3]. There are numerous studies that have been conducted on training however, studies on the training in Halal logistics are quite scanty and limited in investigating this phenomenon internationally and locally because Halal logistics can be

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considered as a new concept in logistics industries and there are no standard or guidelines for the Halal logistics. Malaysia can be considered as an asset-poor in talent human capital. The uniqueness of Malaysia as a multi-religion, multi-racial and multi-lingual county can be addressed by giving the training to the educated, young, energetic, and productive employee with science and service-based understanding [4].

This paper tends to answer questions on what is the state of the Halal logistics industry in Malaysia and what are the factors that influence the training needs in Halal Logistics in Malaysia.

II. LITERATURE REVIEW

A. The Training Needs According to [5], the employees continue to play an

increasing role in the differentiation of product & service. Logistics continued in globalization in trade, delivering freight margin, complex contract, increasing competition, increased security risks, changing role of service providers, technological advancement, required contingency planning and future trade outlook and it is important that employee training seen as investment. The organization must review the type of program, the appropriate provider and evaluate what is the best fit and how the training program can support organization’s future strategy and objective. Employee training can improve the performance productivity of staff and ensure they have the skills that industry needs. The possible training benefit would be increased employee motivation, satisfaction and morale, increased competitiveness, consistency message, increased efficiency, reduction in employee turnover & increased innovation in strategies & product [5]. There are employers who identify that technical development courses are very important for personnel in the supply-chain sector [6]. According to [6] also, training in logistics is very important as: � Lack of awareness and understanding of the logistics

sector. There is a lack of sector awareness among the future workforce participant, so some training has to be undertaken in order to build some awareness and understanding of the logistics industry.

� Attracting, developing and retaining supply chain specialist an emerging priority. IT and policy change influencing the supply chain/logistics businesses. Due to the shortage of workforce, retaining the supply-chain specialist is vital as they have the experience in the industry.

� Emerging occupations/specialist skills set. Due to new technology adapted in the industry and vary from each other, human-resource strategies will need to be adaptable to match variety types of job ranging from semi-skilled (operational) to professional (tactical) to executive level (managerial).

A well-educated/trained workforce will give opportunities for growth and development to the logistics sector. Company/organizations are willing to invest in learning technology, health and quality [6]. Training courses have played an important role in supporting the growth of countless industries in the Middle East, from travel and tourism to manufacturing and retail. However, with a limited quota of specialist programs for supply chain professionals, has expressed a requirement for suitable courses to help standardize its logistics sector, especially in terms of matching the best practices from global leaders such as Europe and North America [7]. Although companies in the Middle East logistics industry have a limited number of options for training their employees, it seemed that the situation will change in next coming years. The suppliers will probably help to address the imbalance, although clients still need to understand the importance of selecting a quality course provider who can meet their specific requirements [7]. In the UK, there are 59% of employers who consider their staff to be 100% competent but there is a shortage of multi-skilled staff [8]. Skills level and lack of applicants resulted in shortage of skills in the logistics sector and it is reported that internal skills gaps are reported in 19% of organization in the sector, 8% of the organization in the logistics sector report skills shortage vacancies, compared to 6% in the whole economy. The growing impact of technology noted that the needs for higher-level skills in the workforce are vital [8]. A report from [8] stated that the future challenges for the logistics sector include a need: � For a wider and more intensive range of management

training to address the growing management skill gaps. � To address workforce deficiencies in basic skill

(numeracy & literacy) among the lower levels of the workforce.

� To challenge the poor image by correcting the misconception about working conditions.

� For a more diverse labor force profile. � To address the limitation of current education and

training provision. � To improve understanding about the business case for

training.

The rising availability of the information management support system and the new grouping of skills and functionality make the choice of support software even more difficult, and it is very important to provide training for the staff. It cannot be postponed in order to manage these new tools [9]. Alternatively, for the transport operators, the need to obtain better management skills is vital [9]. B. Halal Industry According to Dato’ Abdul Hadi Othman [10], components of Halal industry is (1) food (2) non-food and (3) services as shown below in figure 1.

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Figure 1: Components of Halal Industry (Source: MITI)

From this figure, HDC has come out with another

diagram that can illustrate the element and component in the Halal industry more appropriately. The logistics and shipping are among the components that are very important in order to ensure the products reach consumer are Halal [11] [12].

According to Halal Corporation Development (HDC) [13], the objective of Halal logistics is to make sure the Halal integrity of Halal products for the consumer or it can be understood as the command and control of goods flows in a value system in such as may that the Halal Integrity is secured throughout the supply chain and it is vital to have a knowledge on Halal logistics in establishing a Halal compliant supply chain. C. “Halalan Thoiyyibba”

Halalan Thoyyibba is an Islamic concept that means the goods or actions that are permissible and wholesome that refers to Islamic principles and Sharia laws. Halalan Thoyyibba can be easily understood as permissible and allowed for usage with relation Shariah laws as long as they are safe and not harmful as [14]. Referring to Dr. Mah Hussain presentation’s in World Halal Research Summit 2010, he said that the assumption that HARM is similar to HARAM meaning that all the harmful products are Haram [15][16][17][18][19].

The opposite word of Halal is Haram which means prohibited or forbidden. That which the Law-Giver has absolutely prohibited; anyone who engages in it is liable to incur the punishment of Allah in the Hereafter as well as a legal punishment in this world [17]. Yusuf Al-Qaradawi has explained in his book ‘The Lawful and Prohibited in Islam’ that:

“In the Sharia of Islam, the haram has universal applicability. For in Islam there are no privileged classes or individuals who, in the name of religion, can do whatever they please according to their whims. Muslims do not have any privilege of making something haram for others while it is lawful for themselves; this cannot be, for truly Allah is the Lord of all, and the Sharia of Islam is the guide for all. Whatever Allah has legislated through His Sharia is lawful for all human

beings and whatever he has prohibited is prohibited to all human beings until the Day of Resurrection”

D. Development of Framework Figure 2 shows the theoretical framework. The aim is to examine the relative importance of the needs for training in Halal logistics industry in Malaysia as an independent variable which consists of three domains, namely demand, people and awareness as the dependent variable. Based on the literature review, the following research framework can be drawn:

Figure 2: Proposed Theoretical Framework

III. METHODOLOGY

A. Research Design The population of this research is the middle

management level in the logistics companies that have Halal certification by JAKIM and HDC in Malaysia.

Sampling is a process used in the statistical analysis in which a predetermined number of observations will be taken from a larger population or process of selecting a sufficient number of elements from the population by selecting the right sample. The sampling technique used for this research is based on purposive sampling. According to [20], purposive sampling is a sampling which confined to specific types of people who can provide the desired information, either because they are the only ones who have it.

B. Data Collection Method

The questionnaire was personally distributed to all logistics companies that have the Halal certification by JAKIM and HDC in Malaysia. The respondents were given one month to complete and return the questionnaire. At the same time, the questionnaires were sent through the e-mail for respondents who prefer to use the e-questionnaire.

The questionnaire consists of the multiple-choice questions. The response format was based on 7-point Likert scale. The questionnaire is divided into 5 sections. Part A is a question on personal information for demographic survey.

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Part B is on the independent variable and C to E is for the dependent variable.

IV. ANALYSIS A. Sample and Profiles

The questionnaire was distributed via hardcopy and e-mail to the logistics companies operating in the Klang Valley. Three hundred questionnaires were distributed and only 162 returned. This gives 54 % of return rate. A further 46% refused to participate and the reasons for the refusal include time constraint, busy and not specified as company policy. B. Factor Analysis

The Keiser-Meyer-Olkin (KMO) measure of sampling adequacy was used to determine the availability sufficient number of significant correlation for items for factor analysis and its significant was tested with Bartlett’s test of Sphericity. All 14 items were subjected to varimax rotated principal component factor analysis. When extracting with criterion of eigenvalue greater than one, three factors solution which explain 67.55 percent of variance was derived. The factor analysis was conducted for dependent variable of factors that contribute to needs of training in Halal logistics in Malaysia comprise of three factors namely (1) Demand (2) People and (3) level of awareness. The retention of each item was based on factor loadings that equal or greater than .50 and deleted the items that have cross loading [21][22]. Table 1: Summary for Factor analysis of Halal Awareness, People and Demand

C. Reliability Analysis The reliability analysis was used to construct reliable

measurement scale on all variables. The Cronbach’s alpha was conducted to assess the reliability of each scale. Alpha values over .6 indicate that all scale can be considered reliable level [23][24][25][26]. The range between 0 and 1 for Cronbach’s alpha coefficients showed the reliability of the data. The values obtained for all four variables were above .6 which is considered reliable. Halal awareness scored the highest reliability of .91 while, people scored .84 and demand scored the lowest reliability value of .69. Cronbach’s Alpha among item in the questionnaire exceeds .6. Eight items are identified for Halal awareness (HA), four items are identified for people (PP) and two items for demand (DD).

D. Regression Analysis There are various methods of multiple regressions. The enter method is adapted here because the “Enter” method enters all variables at the same time and it was the common used multiple regression analysis. This approach would also tell how much unique variance in the dependent variable each of the independent variables explained [27]. The principal assumptions associated in multiple regression analysis are detailed below: a) The independent variables and the dependent variables

have a linear relationship. b) The three independents variables will significantly

explain the variance in training needs in Halal logistics industry in Malaysia.

The result of regressing the three independent variables

namely (1) Halal awareness (2) people and (3) demand against the training needs in Halal logistics industry can be seen in regression output. Table 2: Model Summaryb

Model R R Square

Adjusted R Square

Std. Error of the Estimate

1 .466a .217 .202 .92618 a. Predictors: (Constant), People, Awareness, Demand,

b. Dependent Variable: Training Needs

Table 3: ANOVAb

Model Sum of Squares df Mean

Square F Sig.

1 Regression 37.517 3 12.506 14.579 .000a Residual 135.533 158 .858

Total 173.049 161 a. Predictors: (Constant), People, Awareness, Demand b. Dependent Variable: Training Needs

COMPONENT ITEMS HA PP DD 1. The way of cleaning Najs (najis ) are

different according to its category (Heavy / Mughallazah), (middle / Mutawassitah) & (light / Mukhafaffah)

0.886

2. Religious obligation is a major concern for me to use Halal products.

0.870

3. Religious / belief knowledge make me concern about Halal and Haram

0.868

4. Are you aware of Samak operation/procedure?

0.828

5. Halal product are safer than conventional products

0.814

6. Do you aware about Halal and Haram issues.

0.769

7. I know that Halal Logo is certified only by Jabatan Kemajuan Islam Malaysia (JAKIM).

0.625

8. I only accept product that have authorized Halal logo by JAKIM into our premises/warehouse/transport/process.

0.573

9. There is no formal education in Halal business for undergraduate.

0.866

10. There is no training institution provide training specifically for Halal Logistics.

0.866

11. The training provider / institution for Halal logistics is very limited

0.849

12. The government offers several benefit and incentives for Halal Logistics operators.

0.647

13. The company lack of experience in handling Halal products.

0.836

14. The company lacks workforce in handling Halal Logistics operation

0.823

Cronbach's Alpha 0.909 0.838 0.689 KMO (Keiser-Meyer-Olkin) value 0.840

Table 4: Coefficientsa Model Unstandardized

Coefficients Standardized Coefficients

t Sig. B Std. Error Beta 1 (Constant) 3.582 .459 7.800 .000

Awareness .207 .061 .241 3.375 .000 People .274 .058 .349 4.736 .000

Demand -.153 .052 -.214 -2.935 .004

a. Dependent Variable: Training Needs

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The table 2 (model summary) in the output lists the three independent variables that are entered into regression model and R (.466) is the correlation of the three independent variables namely (1) Halal awareness (2) people and (3) demand with the dependant variable (training needs), after all the intercorrelations among the three independent variables are taken into account. Referring to the model summary table, the R Square (.217) which is explained variance is actually the square of the multiple R (.466). The ANNOVA in table 17 shows that the F value of 14.579 is significant at the .000 level. In the df (degree of freedom) in the same table, the first number represent number of independent variables (3), the second number (158) is the total number of completed responses for all the variables in the equation (N), minus the number of independent variables (K) minus 1. (N - K - 1) [162 – 3 – 1) = 158]. The F statistic produced (F = 14.579) is significant at the .000 level. What the result means is that 22 % of the variance (R square) in training needs has been significantly explained by the three independent variable.

The next table titled Coefficients helps us to see which among the three independent variables influences most the variance in training needs in Halal Logistics (i.e., the most important). It is explained that in column Beta under Standardized Coefficients the highest number in the beta is .349 for people, which is significant at the .000 level.

V. DISCUSSION

With the respect to the different dimension impact to the training needs in Halal logistics industry, people was found the most important factor influencing the training needs in Halal logistics industry in Malaysia. An extended marketing mix firstly introduced by [28] by adding another three element to the traditional marketing mix 4 P’s by [29]. Research in [30] has introduce “people” as a fifth element in a marketing mix which taking into account the human resources factors with assumption the employee must have the appropriate knowledge about their job. The employee also should have right talent, interpersonal skills and service knowledge to ensure the service delivered meet the consumers expectation.

People in this context refer to the lack of skills and

expertise of human capital in Halal Industry. Halal logistics is considered as a new industry and of course there are lacking of personnel in charge in Halal logistics [31]. The emerging of Halal industries becomes very important as the demand for Halal product and services are huge. Halal can be considered as global product and in order to make sure the quality of the product and services, maintaining, monitoring the integrity of the entire value chain “from farm to fork is very important. Due to the expansion of Halal Industries consumers and manufacturers demand for Halal standard throughout the value chain process such as transportation, storage, packaging, material handling, warehousing, facilities used and the process of product integrity [32].

According to [33] study, Halal product is not only consumed by the Muslims, but also consumed by the non-Muslim worldwide because the Halal concept consists of anything that is free from any element that is prohibited by Sharia Law for the use of Muslims that emphasizes hygiene, safety and the wholesomeness of the food or product. These are the factors that caught the non-Muslims attention as it provides the outstanding platform for healthy dietary promoted by the Islamic way of life [33]. The awareness on Halal created by the government now has shown positive result. Malaysia government has examined and instills Halal awareness among the food importers, manufacturers, producers and distributor since 1982 by Islamic Affair Division under the Prime Minister Department [34]. Islamic Food and Nutrition Council of America (IFANCA) was founded in Illinois in 1982 with the objective of increasing awareness and understanding of Muslim dietary standards, requirements and regulations. The organization is devoted to scientific research in the fields that are related to nutrition, health and food.

The identified independent variable in the framework is

in demand which would comprise several elements such as and the growth in Halal industry that will automatically affect the demand for Halal product throughout the world. Since the demand for Halal product keeps on increasing annually, most of the 3PL companies grab the opportunity to widen their services by providing the Halal logistics services. In order to provide Halal logistics services, there is a need for training in the Halal logistics. Dr. Azhar ul-Haq Lodhi in his book says that demand for Halal product by Muslims in developed western countries such as European Union (EU) and United States of America (USA) create Halal niche market. Although there are some regulatory authorities regarding the slaughtering according to the religion (dhabiha), most of Halal supply chain and logistics operation and activities remain unregulated. He also stresses that the modern industry that is involved in Halal industry is not aware and really understands about Halal operation in Halal food production as it is becoming more important to the global market all around the globe. Therefore, research and training become crucial in the industry because there are many features that require innovation including the development of Halal product by integrating the behavior of Muslims’ consumers and religious.

VI. CONCLUSION

This study has several limitations that can be overcome

in future research for better outcomes. The first limitation is the feedback from the respondents involved in this industry is not encouraging. The second limitation is the time constraints and third limitation is the research is considered as a new research and there is scanty and limited information about it. The sample should cover all logistics companies that have Halal certification by JAKIM and HDC.

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Finally the next research should emphasize the training types that are very critical in order to achieve Halal logistics and try to get the response from consumers who uses the services. In conclusion to this study, it revealed that the relationship between people, demand and awareness has the significant impact to the need of training in the Halal logistics in Malaysia. It needs to be endeavored by the logistics companies in order to have workers who are competent and skillful in the industry.

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