1. INTRODUCTION TO QFD
This set of slides is intended to provide a basic understanding of Quality Function Deployment (QFD) as applied to Business Design
Please do not attempt to use these slides as part of a presentation until you have read and fully understood the relevant sections of ‘Managing by Design’, you know how each slide builds, and you are clear on the points you wish to make with them
This presentation is designed to be given immediately after an explanation of the Why-How Chart
(Notes are available to support the presentation)

2. MAKING SENSE OF THE WHY-HOW
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Mat’l Supply
Maximise Profitable Growth
Reduce Operating Cost
Improve Product Value
Increase Sales Volume
Design and Develop winning Product
Supply and Distribute Product on time
Research Novel Techn’gy and Science
Develop People Resource and Capability
EfficientlyManage Facilities and Assets
Support and Develop Satisfied Customer
Provide and Control Material Efficiently
Produce Succesful Products
Design and Develop winning Concepts ?
Effective organisation design is dependant on a good understanding of the relationships between what you want to achieve, and the potential means you have to achieve it. The Why-How chart helps to draw out this insight through mapping the logical relationships between the objectives and the means to achieve them.
However, the sheer number of possible relationship at the lower end of the chart often causes it to resemble a bowl of spaghetti, and it is difficult to see the relationships clearly. This is doubly unfortunate because it is the bottom end of the Why-How chart that provides most insight into how the activities and processes of the organisation may be best configured to optimally deliver its objectives.
This level of complexity, and the resulting confusion is often the reason that people are reluctant to adopt the rigours of a disciplined approach to organisation design.
But the issue is also true for complex products such as cars, computers and ships, and in the case of designing these it is not a valid option to resort to gut feel and instinct. Instead, designers in these fields adopt an approach developed in the Japanese Shipbuilding industry in The approach is called Quality Function Deployment, or QFD.

3. AN ALTERNATIVE APPROACH
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Mat’l Supply
Maximise Profitable Growth
Reduce Operating Cost
Improve Product Value
Increase Sales Volume
Design and Develop winning Product
Supply and Distribute Product on time
Research Novel Techn’gy and Science
Develop People Resource and Capability
EfficientlyManage Facilities and Assets
Support and Develop Satisfied Customer
Provide and Control Material Efficiently
Produce Succesful Products
Design and Develop winning Concepts
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
The name may seem complex, but the basic idea is surprisingly simple, and in principle involves taking two layers of the why-how chart: a set of clear and relatively detailed objectives; and a set of processes by which they are to be delivered, and setting them at right angles to each other in order to create a matrix within which the relationships can be mapped more clearly. 27

4. BUILDING THE QFD MATRIX
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Mat’l Supply
Maximise Profitable Growth
Reduce Operating Cost
Improve Product Value
Increase Sales Volume
Design and Develop winning Product
Supply and Distribute Product on time
Research Novel Techn’gy and Science
Develop People Resource and Capability
EfficientlyManage Facilities and Assets
Support and Develop Satisfied Customer
Provide and Control Material Efficiently
Produce Succesful Products
Design and Develop winning Concepts
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
…and also to include some other significant factors.
...to indicate those that are particularly strong ...
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Material Supply
The matrix enables you to map out the identified relationships..
The complex pattern of lines can then be simply mapped as links between the processes and the objectives of the organisation.
Furthermore, because of the space that is available in the matrix, it is possible to identify particularly strong relationships and differentiate them from the others. It is also possible to map weaker relationships that would have proven practically impossible to link on the why-how chart without totally obscuring the picture. 28

5. WEIGHTING THE OBJECTIVES
Maximise Profitable Growth
Maximise Profitable Growth
Reduce Operating Cost
Reduce Operating Cost
Improve Product Value
Improve Product Value
Increase Sales Volume
Increase Sales Volume
Improve Economy of Mat’l Supply
Improve Economy of Mat’l Supply
Reduce Costs of Poor- Quality
Reduce Costs of Poor- Quality
Improve Resource Utilisation
Improve Resource Utilisation
Reduce Lead Times
Reduce Lead Times
Produce Succesful Products
Develop Winning Products
Build Customer Loyalty
Build Customer Loyalty
Address New Market Areas
Address New Market Areas
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Provide and Control Material Efficiently
Provide and Control Material Efficiently
Support and Develop Satisfied Customer
Support and Develop Satisfied Customer
EfficientlyManage Facilities and Assets
EfficientlyManage Facilities and Assets
Develop People Resource and Capability
Develop People Resource and Capability
Research Novel Techn’gy and Science
Research Novel Techn’gy and Science
Supply and Distribute Product on time
Supply and Distribute Product on time
Design and Develop winning Concepts
Design and Develop winning Product
Wt.
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1
The matrix allows for reflecting the result of front end logic through a weighting column
The other relationships in the Why-How chart can be summarised into differential weightings for each of the objectives, depending on how each is linked in to contributing to the fundamental objective. 31

6. RANKING IMPORTANCE 3 x 1 + 5 x 1 + 2 x 9 + 4 x 3 = 38
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Wt.
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1
3 x 1
= 38
+ 5 x 1
+ 2 x x 3
The combination of the weighting of the objectives, and the potential for each process to contribute to each objective provides a means to ascertain the potential importance of each process to achieving the objectives overall. This slide shows how the QFD grid can be used to rank the various processes in terms of their importance in leveraging the business to achieve its objectives.
The value of the relationships are 9 for a critical (strong) relationship, 3 for a major (normal) one, and 1 for a significant (weak) relationship. These values have been empirically derived during the early years of QFD, and still provide a very effective basis for scoring the processes.
Ranking 81
115 4 66 38 89 54
The result of the logic can be calculated numerically as a basis for discussion, or for setting priorities 35

7. DRIVING INSIGHT
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Wt.
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1 ?
Working through the QFD cell by cell provides an opportunity to explore and understand the potential for each process to impact and influence each objective. As a result it helps the management team to identify links and opportunities that have previously been dormant, or worse!
Working through the grid together enables the management team to develop a more comprehensive insight into the operation of the business as a whole, and enables them to learn from each others experience and ideas, and to develop a collective and shared understanding.
Ranking 81
115 4 66 38 89 54
Exploring the full potential of each strategy to make a difference, and reconciling different views 35

8. RECOGNISING NEED
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Wt.
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1 ?
When the grid has been completed, the QFD helps to identify issues in the current thinking, for instance where the current approaches are insufficient to ensure a key objective…
Ranking 81
115 4 66 38 89 54
The grid can be used to identify poorly supported objectives… 35

9. ? CHALLENGING APPROACH …or poorly utilised (redundant?) processes 3 5
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Wt.
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1
… or where an existing or planned process has little relevance to the current objectives.
In each of these cases, QFD provides the means to understand these gaps, and to reconcile these. For instance by developing a new process, or extending the relationships, or removing objectives and processes …. Or merely identifying where the thinking has been in error and going back and correcting it.
Ranking 81
115 4 66 38 89 54
…or poorly utilised (redundant?) processes ? 35

10. DEPLOYING CONCLUSIONS
© TMS
DEPLOYING CONCLUSIONS
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Wt.
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1
Finally the relationships in the QFD (and the notes that have been taken during the discussions) can be deployed to teams who will undertake the design and management of each of the processes to ensure that they fulfil their potential.
This approach ensures that each team can fully understand their potential and contribution and can then develop their process to effectively deliver that, probably by means of another QFD at the next level down. The level of understanding provided by the QFD, and the absence of prescription, means that each process team has the best opportunity to harness their creativity in taking things forward.
Ranking 81
115 4 66 38 89 54
Providing clear direction and understanding to harness and harmonise the creative effort of separate teams
© TMS 35

11. ESTABLISHING MEASURES AND TARGETS
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
The discussions should provide a clear basis for identifying measures and setting targets...
Wt.
Measure
Target
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1
Overall Mkt.Share
Customer Retention
Innov. copied by Compet'n
Production Cycle
Asset Utilisation
CoNC as %T/O
Benefit / Cost Ratio
> 34%
> 85%
> 5 p.a.
< 6 Days
> 55%
< 12%
> 140%
The QFD diagram also provides a basis for listing out relevant measures and targets against the objectives and processes…
Ranking 81
115 4 66 38 89 54
Quantitative
Criteria for
Determining
Success
Measure
New Sales Growth
Delivery on Time
New Innov-ations
Growth in ToR (%p.a.)
Break -down Level
Sales Growth
Reduc'n as % of T/O
>10% p.a.
> 98.5%
3 p.a.
>50% avg. pa
<3%
>20% p.a.
4% p.a.
Target 36

12. IDENTIFYING CONFLICT AND SYNERGY
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Having established meaningful targets, the approach can be checked for conflict and synergy.
This should provide the basis of a communications/reporting strategy.
Wt.
Measure
Target
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply 3 5 4 2 1
Overall Mkt.Share
Customer Retention
Innov. copied by Compet'n
Production Cycle
Asset Utilisation
CoNC as %T/O
Benefit / Cost Ratio
> 34%
> 85%
> 5 p.a.
< 6 Days
> 55%
< 12%
> 140%
And for exploring the potential conflict and synergy between the various processes (and thereby determining their communication needs)
Ranking
Measure
Target 81
115 4 66 38 89 54
New Sales Growth
Delivery on Time
New Innov-ations
Growth in ToR (%p.a.)
Break -down Level
Sales Growth
Reduc'n as % of T/O
>10% p.a.
> 98.5%
3 p.a.
>50% avg. pa
<3%
>20% p.a.
4% p.a. 37

13. VALUE OF QFD Structured, systematic basis for reductionist thinking:?
Wt. ?
Structured, systematic basis for reductionist thinking:
Drives exploration and shared understanding of the whole business
Establishes a basis for objective design and management of business entities
Encourages thought before action
Challenges assumptions
Prioritises effort
In summary – the key benefits of QFD …
Ranking

14. QFD: A TOUR OF THE HOUSE 1 2 3 4 5 6 7 8 1 Objectives 2 Approaches
3 Relationships
4 Weighting
5 Ranking
6 Correlation
7 Measures
8 Targets
Clear objectives:
Things to achieve
Role of your organisation
How it serves
The difference it makes
What it wants to be
Targets:
Thresholds of Pride
Quantified aspirations
Specific point which defines the edge of success
Numerical goal
Measures:
Objective indicators of success
Quantified assessment of achievement
Represent a tangible effect / impact
Weighting:
Relative importance
Balance of priority
Comparative value in its own right, or in supporting higher goals
Ranking:
Calculated importance of process to all objectives
Leverage in achieving goals
Relative priority for mgt. time
Contribution:
Potential contribution of the process to achieving the goal
Positive or Negative
Critical, major or significant!
Process Targets:
Defined objectives for process
Normally more than one
Rarely included on the chart
Product Design and Development
Product Supply and Distribution
Novel Research and Science
People Resource Development
Facilities and Asset Management
Customer Support and Development
Material Provision and Control
Processes:
Patterns of work
Routes to fulfil the objectives
Flows of activity to a defined end
Logical model
Correlation:
Potential for synergy/conflict between processes
Alignment or diversity of process goals
Need for communication 3 5 4 2 1
Wt.
Overall Mkt.Share
Customer Retention
Innov. copied by Compet'n
Production Cycle
Asset Utilisation
CoNC as %T/O
Benefit / Cost Ratio
Measure
> 34%
> 85%
> 5 p.a.
< 6 Days
> 55%
< 12%
> 140%
Target
Address New Market Areas
Build Customer Loyalty
Develop Winning Products
Reduce Lead Times
Improve Resource Utilisation
Reduce Costs of Poor- Quality
Improve Economy of Materiel Supply
..and a quick recap of the relevant sections … 81
115 4 66 38 89 54
Ranking
New Sales Growth
Delivery on Time
New Innov-ations
Growth in ToR (%p.a.)
Break -down Level
Sales Growth
Reduc'n as % of T/O
>10% p.a.
> 98.5%
3 p.a.
>50% avg. pa
<3%
>20% p.a.
4% p.a.
Measure
Target 38

15. REAL EXAMPLE OF BUSINESS DESIGN
Significant Contribution
House Keys:
Critical Contribution
Major Contribution
Roof Keys:
Strong Synergy
Weak Synergy
Weak Conflict
Strong Conflict
Synergy or Conflict
Ranking
Wt.
Manage Material
Supply Effectively 5
Manage Customer Expect-
actions & Requirements
Effectively Plan
SAE Resources 4
Improve total flexibility
Develop Technical &
Management Skills
Manage Finances 2
Ensure Compliance 3
Develop & Improve Business Processes, Tools & Systems
Leo
van den
Heuvel
Process Manager
Measure
Material POU
Supplier DOH (RM)
OT to Customer
Request
Value Add Per
Equivalent Head
Process
improvem’t count
Skills
Coverage
Gross Profit %
ITO
Audit Plan score
Actual
Target
93%
18 Days
95%
34.5K Dfl 44
90%
13%
11.5
Leo van
den Heuvel
Henk Leijten
Paul
Jungschläger
Hans van
der Klift
Johan
Verhoeven
Dietmar
Harteveld
Jacco
Groeneveld
Objective
Owner
Owner Dietmar Harteveld
Systems Assembly Europe
Business System QFD
P8 FY99 (09 June 99)
SAE House
18.1
86% 0% 15
91%
13.8%
15.21
68%
33.5 K
Interproc. Resp. Ind.
Cust. Survey Index
75%
B + 100%
100%
162
Planning & Inven-
tory Management
HR Process 97
Management
Project
156
Jung-
schläger
Purchasing
132
Henk
Leijten
Quality Manage-
ment System
106
Assemble &
Test 88
Hans
van der
Klift
Receiving &
Distribution 96
Raymond
Korving
Plan & Control
Finances 87
Groene-
veld 91
Manufacturing
Support
Jelle
Struijk
111 x
Dev. of Business
Proc. & Systems
55.75 %
REAL EXAMPLE OF BUSINESS DESIGN
…and finally a real example.