Proposed Model for Halal Blockchain Barrier: Literature Review and

Interview

Dwi Iryaning Handayani

1,2 a

, Iwan Vanany

and Udi Subakti Ciptomulyono

Department of Industrial and Systems Engineering, Institut Teknologi Sepuluh Nopember Kampus ITS Sukolilo,

Surabaya, Indonesia

Department of Industrial Engineering, Universitas Panca Marga, Probolinggo, Indonesia

Keywords: Halal Blockchain, Adoption, Barriers.

Abstract: Muslim consumers’ concern towards the quality and safety of food and halal is increasing for products

consumed according to Islamic law. Blockchain technology is a solution to increase trust and provide full

transparency to ensure product integrity throughout the halal supply chain. However, not all companies adopt

blockchain in their supply chains, and this is because the application of blockchain technology in the industry

faces various obstacles in adopting it. This study proposed model for halal blockchain adoption barriers and

factors that can hinder the potential of blockchain in the halal industry. Literature review and interviews with

practitioners have been carried out in this study. The SCOR (Plan, Source, Make, Delivery) is adopted to

determine the factors of halal blockchain in each of its business processes. The results show eight (8)

blockchain barriers, consisting of two barriers on the Plan, Source seven barriers, Make eight barriers, and

Delivery four barriers. The practical implication of this research is the barrier factors halal adoption of halal

blockchain that can affect companies.

1 INTRODUCTION

Blockchain is a digital technology that can provide

solutions to the reputation of halal products caused by

cases of halal violations (Tieman & Darun, 2017). As

for cases of halal violations such as halal fraud, halal

counterfeiting, cross-contamination, logistical

problems, and non-standard halal standards (Ali et al.,

2021). This halal violation has the potential to affect

the loss of consumer confidence in halal products

(Khan et al., 2021). Therefore, the use of halal

blockchain technology can increase trust and

transparency and ensure product integrity throughout

the halal supply chain(Vanany et al., 2020). In

addition, blockchain is a prospective technological

breakthrough and a significant solution in solving

supply chain problems and halal (Handayani et al.

2021)

However, blockchain technology is relatively new

and developing, so the immaturity of new

technologies often creates several barriers to its

https://orcid.org/0000-0001-8849-9982

https://orcid.org/0000-0002-0774-514X

implementation (Vafadarnikjoo et al., 2021). Besides,

technology blockchain still has unresolved problems

and challenges beyond technical, so it requires more

exploration and investigation (Xu et al., 2021). Even

the implementation of blockchain projects was

stopped, and the current blockchain adoption rate is

around 20% (Sanka et al., 2021). This indicates that

there are barriers to blockchain implementation, thus

motivating researchers to study blockchain barriers

such as (Saberi et al., 2019a), resulting in external

barriers, inter-organizational, intra- organizational,

and technical in sustainable supply chains.

Blockchain barriers in sustainable supply chains

were classified by technology, environment, and

organization (Kouhizadeh et al., 2021a).

Performance expectations, effort expectations,

social influence, and enabling factors, such as trust

are blockchain barriers in operations and supply chain

management (Queiroz et al., 2019). On the other

hand, in the context of a developing country such as

Indonesia, this obstacle becomes more critical, as

conveyed by the Directorate General of Information

Handayani, D., Vanany, I. and Ciptomulyono, U.

Proposed Model for Halal Blockchain Barrier: Literature Review and Interview.

DOI: 10.5220/0012105200003680

In Proceedings of the 4th International Conference on Advanced Engineering and Technology (ICATECH 2023), pages 47-54

ISBN: 978-989-758-663-7; ISSN: 2975-948X

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

Applications at the Ministry of Communication and

Information, stating that Indonesia has not been able

to utilize the potential of blockchain technology fully,

this is due to uneven penetration. Internet, quality,

and quantity of human resources, technical

challenges, and audit processes. It is moreover

facilitating conditions and trust.

Thus, there are several barriers to applying

blockchain technology, but the resulting barriers tend

to focus on general industries, not specific to the halal

industry. Therefore, the resulting barriers cannot be

referenced to the halal industry. This shows that there

is still little attention and research on the barriers to

blockchain technology in the halal industry, even

though blockchain has great potential to overcome the

halal problem. Therefore, this study will propose a

model for identifying halal blockchain barriers in

Indonesia. The proposed model is a conceptual model

based on the Supply Chain Operations Reference

(SCOR), which includes a plan, source, make, and

delivery. The SCOR model is a model that is believed

to be able to design, describe, and configure various

types of supply chain activities (Sundarakani et al.,

2018). With the SCOR model, identification of

barriers can be carried out starting from a plan,

source, make, and delivery activities. For this reason,

obtaining halal blockchain barriers is carried out

using literature reviews and expert interviews.

This research aims to obtain a model for

identifying and analysing halal blockchain barriers by

conducting literature reviews and interviews. This

paper consists of section I introducing the

background, section II literature review, and the

research methodology entered section III. Sections

IV-V present the proposed model, and discussion of

section VI conclusions.

2 LITERATURE REVIEW

Halal Blockchain is a technology that supports halal

supply chain management (Tieman et al., 2019) and

can improve the performance of the halal supply

chain (Surjandari et al., 2021). Blockchain Halal

provides several advantages for producers,

distributors, retailers, logistics service providers, and

halal certification bodies. With blockchain

technology, it can overcome various halal issues, and

product recalls.

Another advantage is that halal supply chain

companies cannot commit fraudulent actions. This is

because the halal Blockchain has complete

information shared with all participants in the halal

supply chain network. So that if there are parties

committing fraud, it will be easy to identify the

perpetrators because this information can be seen

(Katuk, 2019). This is because the authenticity and

security of Halal Blockchain are a priority in securing

confidential data and minimizing the chances of

cyber-attacks (Surjandari et al., 2021). Besides, halal

Blockchain provides clear benefits and better

credibility for halal producers and certification

bodies. Therefore, it is essential to adapt to this

technology to ensure its haleness from upstream to

downstream of the supply chain process. Thus

standardization of the halal supply chain can be

realized to support the halal industry and its global

supply chain.

Halal Suppl

Chain

Halal Blockchain

Figure 1: Halal supply chain and halal blockchain.

According to Katuk (Universiti Utara Malaysia &

Katuk, 2019), there is a difference between a halal

supply chain using blockchain and without

blockchain, more details can be seen in Figure 1. All

transactions in the supply chain that implement halal

blockchain from suppliers, manufacturers,

distributors, retailers, logistics providers, and

customers store their transactions in a shared ledger,

and smart contracts control them. Thus, halal product

ICATECH 2023 - International Conference on Advanced Engineering and Technology

certification can be carried out efficiently and

uncomplicatedly. This is

because halal certification

bodies can access shared ledgers and smart contracts

for product certification. While the supply chain

system is without a halal blockchain, all entities in the

system record transactions in the internal ledger

separately. Halal certification bodies must ensure

halal conditions for all entities individually, making

the process complicated.

Empirically Chandra, Liaqat, and Sharma

(Chandra et al., 2019) have proven that ownership of

halal products can be traced on the blockchain. The

blockchain ledger provides a complete audit trail of

all operations performed from scratch, making it easy

to track product ownership. So Blockchain

technology can be a transformational force that

improves the status of halal regulations. Blockchain

technology in the halal industry will increase trust

among halal supply chain actors, ultimately enabling

consumers to make more informed and confident

choices. The halal supply chain is distinguished with

and without blockchain, as illustrated in Figure 1.

3 METHODOLOGY

The objective of this paper is to propose a model of

halal blockchain adoption barriers with two stages

such as (1) identifying barriers factors of halal

blockchain based on a literature review using the

scopus database and (2) interviewing experts. in

reviewing the literature, the scopus database is the

first step. the keywords that are used to search for

barriers in halal blockchain research topics are

“adoption," barriers, “blockchain," and “supply

chain". in the second step, interviews are conducted

with academics, practitioners, and professionals or

halal blockchain experts. in contrast, the expert

qualifications are at least a bachelor's degree and an

average work experience of five years in the field.

interview with experts or professionals aims to

understand experts/professionals' opinions based on

qualitative data and conclusions (Bryman, 2016).

interview protocol developed to understand barriers

to adoption factors of halal blockchain with three

sections: blockchain technology, blockchain

applications in the supply chain, and halal blockchain.

4 RESULTS

4.1 Proposed Adoption Barriers Model

for Halal Blockchain

The proposed model has three levels such as 1)

b u s i n e s s p r o c e s s e s r e l a t e d b a s e d o n t h e S C O R m o d e l ,

2) adoption barriers factors for halal blockchain, and

3) adoption sub barriers factors for halal blockchain;

The following is the description:

Level 1: Business processes related based on the

SCOR model

Much previous research used four business processes

(Plan, Source, Make, and Delivery) from the SCOR

model (Nyoman Pujawan & Geraldin, 2009); (Lestari

et al., 2021)The following describes four business

processes as level 1 in the proposed model of halal

blockchain adoption barriers:



Plan: describes the entities or stakeholders

involved in the form of a Halal Assurance

Institution in a country. For example, in

Indonesia, BPJPH, MUI. Halal auditors

(LPPOM MUI, Sucofindo, etc.). BPJPH, as a

halal authority of the Indonesian government,

has control for supply chain planning in a halal

certification process.



Source: describes suppliers who fulfill raw

materials according to halal standards. For

example, chicken farming is a supplier of

chicken slaughtering companies.



Make: represents activities flow to the halal

production process. For example, chicken

slaughter companies' production processes are

stunning, pre-slaughtering and slaughtering.



Delivery: describes the halal distribution process

for finished goods to the end customers. For

example, in halal chicken food, chicken

slaughtering companies deliver the halal chicken

carcass to their customers, such as fried chicken

restaurants, supermarkets, and end customers.

Level 2 and Level 3: Adoption barriers and sub-

factors for halal blockchain

Based on searching in the Scopus database, eight (8)

factors of barrier adoption in blockchain

applications such as inter-organizational barriers,

technological and security, etc. Figure 2 shows the

eight barrier adoption factors of blockchain

applications based on review literature in the Scopus

database from 2017 - 2021

• Inter-organizational barrier. An organizational-

level barrier that hinders blockchain

implementation. Several inter-organizational

barrier factors such as the absence or weakness of

Proposed Model for Halal Blockchain Barrier: Literature Review and Interview

communication, collaboration, and coordination

among

members of supply chain. Saberi (Saberi

et al., 2019b) stated that collaboration is essential

in sharing information between supply chain

partners, lack of effective the communication,

collaboration, coordination, and among supply

chain partners can disrupt blockchain

implementation. 2) Challenge information

exposes policy between partners in the supply

chain. Saberi (Saberi et al., 2019b) and Farooque

(Farooque et al., 2020) stated that challenging

information was the most significant obstacle. 3)

Challenges in integration issues with blockchain

technology and sustainability in SC. 4) The

cultural diversity of supply chain participants,

according to Farooque (Farooque et al., 2020)

and Saberi (Saberi et al., 2019b) less relevant, so

this barrier was excluded from several identified

barriers. 5) Lack of consumer awareness of

sustainability issues and a willingness to use

blockchain technology is an obstacle to the

implementation of sustainability(Saberi et al.,

2019b). 6) Transparency versus privacy dilemma

and uncertainty about blockchain suitability.

• Technological and security barriers. The most

crucial obstacle is because blockchain

technology has many essential features such as

distributed database security and transparency.

• Social and environmental barriers. Covers

environmental health and safety issues that are

essential application focus for blockchain.

• External barriers. These barriers come from

external stakeholders, industry, institutions, and

government.

• System-related barrier. A limitation of access to

technology in obtaining real-time information

(Öztürk & Yildizbaşi, 2020).

• Regulatory barrier. Balancing the opportunities

offered with potential unforeseen effects is a

difficult task because of regulatory ambiguity

(Öztürk & Yildizbaşi, 2020).

• Organizational and individual barriers.

Organizational internal impediments include

financial limitations, a lack of management

commitment and support, a lack of available

company policy for using technology, a lack of

knowledge and experience, and a lack of new

company procedures (Öztürk & Yildizbaşi,

2020).

• Financial and human barrier. A barrier that often

occurs in technology adoption because the

adoption of new technology causes high

investment costs and a lack of information

technology personnel.

Figure 2. Barrier’s adoption factors of blockchain

application

Figure 2 is a dimension in identifying various

barriers that hinder the adoption of blockchain

technology. The results of identifying barriers from

the literature review and expert interviews are shown

in Table 1. The identified barriers are from the expert

as many as eleven (11), while the other barriers result

from the literature review.

Table 1: Review and interview for barriers factors.

Barriers Dimension Barriers Factors Authors

1. Inter-

organizational

Barriers

1.1. Coordination,

communication,

and collaboration

in SC

(Saberi et al.,

2019b); (Farooque

et al.,

2020);(Öztürk &

Yildizbaşi,

2020);(Choi et al.,

2020)

1.2. Challenge

information

disclosure policy

between partners

in SC

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

1.3 Challenges in

integration issues

with blockchain

technology and

sustainability in

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

1.4 the cultural

diversity of

supply chain

partners

(Saberi et al., 2019b)

;(Farooque et al.,

2020);(Choi et al.,

2020)

1.5 Lack of consumer

awareness of

sustainability

issues and

technology

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

2. Technological And

security barriers

2.1 A lack of

technological

sophistication

(Öztürk & Yildizbaşi,

2020); (Choi et al.,

2020); (Sabbagh,

2021);

(Mathivathanan et al.,

2021)

2.2 Data security (Sabbagh,

ICATECH 2023 - International Conference on Advanced Engineering and Technology

Barriers Dimension Barriers Factors Authors

2021);(Öztürk &

Yildizbaşi, 2020);

(Kouhizadeh et al.,

2021a)

2.3 Usability

(Sabbagh,

2021);(Öztürk &

Yildizbaşi, 2020)

2.4 Complexity

(Sabbagh,

2021);(Öztürk &

Yildizbaşi, 2020);

(Choi et al.,

2020);(Biswas &

Gupta, 2019)

2.5 Interoperability

(Öztürk & Yildizbaşi,

2020); (Choi et al.,

2020); (Sabbagh,

2021) [Expert

Opinion]

2.6 Forking

(Öztürk & Yildizbaşi,

2020); (Sabbagh,

2021)

2.7 Performance and

scalability

(Choi et al., 2020);

(Sabbagh, 2021)

2.8 Cost

[Expert Opinion];

(Choi et al., 2020)

2.9 Negative

perception toward

technology

(Kouhizadeh et al.,

2021a);(Choi et al.,

2020)

2.10 Access to

technology

(Kouhizadeh et al.,

2021a);(Choi et al.,

2020)

2.11 Unclear

Governance

Structure

(Lohmer & Lasch,

2020)

2.12 Missing

standards,

(Lohmer & Lasch,

2020)

2.13 Complex

rotocol selection

(Lohmer & Lasch,

2020)

2.14 Trial and

reversibility

(Choi et al., 2020)

2.15 Lack of large

computing powe

(Mathivathanan et al.,

2021)

2 Social and

environmental

barriers

3.1 Information

sharing

(Sabbagh,

2021);(Öztürk &

Yildizbaşi, 2020);

3.2 Wasted resources

(Choi et al.,

2020);(Öztürk &

Yildizbaşi, 2020)

3.3 Lack of industry

participation in

blockchain

adoption and

moral and secure

procedures

(Kouhizadeh et al.,

2021a); (Choi et al.,

2020)

3.4 Governmental

olicies

(Kouhizadeh et al.,

2021a); (Choi et al.,

2020)

3.5 Lack of external

stakeholders

‘involvemen

(Kouhizadeh et al.,

2021a) ;[Expert

Opinion]

3.6 Lack of rewards

and incentives

(Kouhizadeh et al.,

2021a)

3.7 Market

competition and

(Kouhizadeh et al.,

2021a)

Barriers Dimension Barriers Factors Authors

uncertainty

3.8 Perceived

impediment to

blockchain's

correct legal

structure and

legislation

(Choi et al., 2020)

3.9 Perceived

restriction on an

infrastructure

that is

technologically

effective

(Choi et al., 2020)

3.10 The perception

of a governance

constrain

(Choi et al., 2020);

[Expert Opinion]

3.11 Perceived

constraint on

encouragement

program

(Choi et al., 2020)

4. External

barriers

.1 Lack of

government policies

(Saberi et al., 2019b)

;(Farooque et al.,

2020); (Lohmer &

Lasch, 2020)

4.2 Market

competition and

uncertainty

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

4.3 Lack of external

stakeholders’

involvemen

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

4.4 Lack of industry

articipation in moral

and secure

rocedures

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

4.5 Lack of reward

and

encouragement

programs

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

5. System related

Barriers

5.1 Security

challenge

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

5.2 Access to

technology

(Saberi et al., 2019b)

;(Farooque et al.,

2020) [Expert

Opinion]

5.3 The reluctance to

use blockchain

technology

(Saberi et al., 2019b)

;(Farooque et al.,

2020) [Expert

Opinion]

5.4 Because of

unfavorable public

opinion

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

5.5 Immutability

challenge of

blockchain

technology

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

5.6 Immaturity of

technology

(Saberi et al., 2019b)

;(Farooque et al.,

2020)

6. Regulatory barrier

6.1 Regulations differ

between nations,

but nevertheless

practical

lockchain

(Sabbagh, 2021)

(Mathivathanan et al.,

2021)

Proposed Model for Halal Blockchain Barrier: Literature Review and Interview

Barriers Dimension Barriers Factors Authors

regulations are still

in the development

stage.

6.2 No universal

regulatory binding

in each country

(Biswas & Gupta,

2019).

7. Organizational and

individual barrier

7.1 Strong

bureaucracy and a

hierarchical structure

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020)

7.2 Rigorous

administrative

oversigh

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020)

7.3 Information

sharing obstacles

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020)

7.4 Mindset of people

needs to be changed

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020)

7.5 Financial

Constraints

(Saberi et al., 2019b)

;(Farooque et al.,

2020);(Kouhizadeh et

al., 2021a)

7.6 A lack of

dedication and

assistance from

management

(Saberi et al., 2019b)

;(Farooque et al.,

2020);(Kouhizadeh et

al., 2021a)

7.7 The absence of

updated

organizational

guidelines for

utilizing

blockchain

technology

(Kouhizadeh et al.,

2021a)

7.8 Lack of

experience and

knowledge

(Saberi et al., 2019b)

;(Farooque et al.,

2020); [Expert

Opinion]

7.9 Challenges with

modifying

corporate culture

(Saberi et al., 2019b)

;(Farooque et al.,

2020);(Kouhizadeh et

al., 2021a); [Expert

Opinion]

7.10 Reluctance to

switch to new

systems

(Saberi et al., 2019b)

;(Farooque et al.,

2020);(Kouhizadeh et

al., 2021a); [Expert

Opinion]

7.11 Insufficient

tools for

integrating

blockchain

technology into

sustainable

supply chains

(Saberi et al., 2019b)

;(Farooque et al.,

2020);(Kouhizadeh et

al., 2021b)

8. Financial and

human

8.1 Lack of IT

ersonnel

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020) ; [Expert

Opinion]

8.2 High investment

cost

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020) ;[Expert

Opinion]

8.3 A lack of units

for research and

developmen

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020)

Barriers Dimension Barriers Factors Authors

8.4 Poor financial

support for

technological

infrastructure

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020) ; [Expert

Opinion]

8.5 Block chain

technology does

not receive

enough financial

suppor

(Sabbagh, 2021):

(Öztürk & Yildizbaşi,

2020) ; [Expert

Opinion]

5 DISCUSSION

Barriers in plan are in touch with the government as

a policy provider supporting blockchain

implementation for the halal assurance system in

Indonesia. This is in line with (Sanka et al., 2021),

who stated that uncertainty in government

regulations is a significant barrier to blockchain

implementation. The barriers in plan are External and

regulatory barriers. Proposed adoption barriers

model for halal Blockchain is shown in Figure 3.

Source, make, and delivery, namely regulatory and

external barriers. Meanwhile, the other six barriers

are source, make, and delivery. Thus, the SCOR

model can investigate the connections between all

the players in the halal supply chain in the face of

all obstacles to implementing halal blockchain.

suppliers and supporting suppliers must have a halal

certificate. For this reason, integrating producers,

suppliers, and the government in realizing safe and

halal products is the key to the success of halal

certificates. However, there are

obstacles to

implementing halal blockchain-based food safety,

including the lack of knowledge, employee skills,

costs, and infrastructure (Biswas & Gupta, 2019).

These barriers are included in the category of

barriers,

including Inter-Organizational Barriers –

Social environmental – System related barriers,

External barriers – Regulatory – Organizational and

individual barriers, Financial and human.

Figure 3: Proposed adoption barrier model for halal

blockchain.

ICATECH 2023 - International Conference on Advanced Engineering and Technology

Barriers that occur in Make are not only limited

to the production process but are extended to

physical separation in packaging, and storage, which

is guided by HAS 2300 in maintaining the

sustainability of the halal production process. All

information related to the halal production process

from various stakeholders throughout the supply

chain is stored in the Halal Blockchain. The

involvement of all stakeholders in an integrated

system creates barriers to its implementation. The

barriers in make stage consist of Inter- Organizational

Barriers, Technology, and security barriers, Social

environmental- System-related barriers, External

barriers- Regulatory- Organizational and individual

barriers, Delivery barriers that are both financial and

human in nature are the basis of logistics and its most

obvious expressions. In halal delivery, non-halal and

halal goods cannot be mixed. To maintain the

haleness of the product during operation, it must be

handled with the proper process by the assigned

person (Tieman & Darun, 2017). But there is still a

lack of comprehension of the appropriate methods

for implementing blockchain technology for

distribution systems (Marsusvita et al., 2021), so there

are barriers to halal blockchain. Barriers to

delivery

include Inter-Organizational Barriers, External

barriers, Regulatory, Financial, and human.

6 CONCLUSION

This study applies the SCOR model's theory to

identify impediments to halal blockchain usage. The

identification results show that there are eight

blockchain barriers consisting of two barriers in plan,

seven barriers to source, and eight barriers to make

and deliver to four barriers. Of the eight barriers,

there are two main barriers in plan, barriers in plan,

source, make, and delivery, namely regulatory and

external barriers. Meanwhile, the other six barriers

are source, make, and delivery. Thus, the SCOR

model can explore the relationship between all actors

involved in the halal supply chain in the face of all

obstacles to implementing halal blockchain

ACKNOWLEDGEMENTS

The authors are very grateful to The Ministry of

Research, Technology and Higher Education of the

Republic of Indonesia for providing a Doctoral

Dissertation Research Grant.

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