2. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 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)

3. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 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 CostImprove Product ValueIncrease Sales Volume Design and Develop winning Product Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently Address New Market Areas Build Customer Loyalty Produce Succesful Products Reduce Lead Times Improve Resource Utilisation Reduce Costs of Poor- Quality Improve Economy of Mat’l Supply Maximise Profitable Growth Reduce Operating CostImprove Product ValueIncrease Sales Volume Design and Develop winning Concepts Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently ?

4. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 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 CostImprove Product ValueIncrease Sales Volume Design and Develop winning Product Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently Address New Market Areas Build Customer Loyalty Produce Succesful Products Reduce Lead Times Improve Resource Utilisation Reduce Costs of Poor- Quality Improve Economy of Mat’l Supply Maximise Profitable Growth Reduce Operating CostImprove Product ValueIncrease Sales Volume Design and Develop winning Concepts Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently 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 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

5. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 4 BUILDING THE QFD MATRIX The matrix enables you to map out the identified relationships.. 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 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 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 CostImprove Product ValueIncrease Sales Volume Design and Develop winning Product Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently Address New Market Areas Build Customer Loyalty Produce Succesful Products Reduce Lead Times Improve Resource Utilisation Reduce Costs of Poor- Quality Improve Economy of Mat’l Supply Maximise Profitable Growth Reduce Operating CostImprove Product ValueIncrease Sales Volume Design and Develop winning Concepts Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently...to indicate those that are particularly strong... …and also to include some other significant factors.

6. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 5 WEIGHTING THE OBJECTIVES 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 3 5 4 2 3 4 1 Wt. The matrix allows for reflecting the result of front end logic through a weighting column 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 CostImprove Product ValueIncrease Sales Volume Design and Develop winning Product Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently Address New Market Areas Build Customer Loyalty Produce Succesful Products Reduce Lead Times Improve Resource Utilisation Reduce Costs of Poor- Quality Improve Economy of Mat’l Supply Maximise Profitable Growth Reduce Operating CostImprove Product ValueIncrease Sales Volume Design and Develop winning Concepts Supply and Distribute Product on time Research Novel Techn’gy and Science Develop People Resource and Capability Efficiently Manage Facilities and Assets Support and Develop Satisfied Customer Provide and Control Material Efficiently

7. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 6 RANKING IMPORTANCE 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 3 5 4 2 3 4 1 81115466388954 Ranking Wt. The result of the logic can be calculated numerically as a basis for discussion, or for setting priorities 3 x 1 + 5 x 1 + 2 x 9 + 4 x 3 = 38

8. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 7 DRIVING INSIGHT 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 3 5 4 2 3 4 1 81115466388954 Ranking Wt. Exploring the full potential of each strategy to make a difference, and reconciling different views ?

9. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 8 RECOGNISING NEED 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 3 5 4 2 3 4 1 81115466388954 Ranking Wt. The grid can be used to identify poorly supported objectives… ?

10. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 9 CHALLENGING 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 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 3 5 4 2 3 4 1 81115466388954 Ranking Wt. …or poorly utilised (redundant?) processes ?

11. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 10 DEPLOYING CONCLUSIONS 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 3 5 4 2 3 4 1 81115466388954 Ranking Wt. Providing clear direction and understanding to harness and harmonise the creative effort of separate teams © TMS

12. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 11 ESTABLISHING MEASURES AND TARGETS 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 3 5 4 2 3 4 1 81115466388954 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% 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. MeasureTarget Ranking Measure Target Wt. Quantitative Criteria for DeterminingSuccess The discussions should provide a clear basis for identifying measures and setting targets...

13. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 12 IDENTIFYING CONFLICT AND SYNERGY 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 3 5 4 2 3 4 1 81115466388954 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% 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. MeasureTarget Ranking Measure Target Wt. Having established meaningful targets, the approach can be checked for conflict and synergy. This should provide the basis of a communications/reporting strategy.

14. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 13 ? ? ? ? ? ? ? Wt. ?? ? ? ? ?? ? ? ?? Ranking VALUE OF QFD 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

15. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 14 Process Targets: n Defined objectives for process n Normally more than one n Rarely included on the chart Correlation: n Potential for synergy/conflict between processes n Alignment or diversity of process goals n Need for communication Ranking: n Calculated importance of process to all objectives n Leverage in achieving goals n Relative priority for mgt. time Contribution: n Potential contribution of the process to achieving the goal n Positive or Negative n Critical, major or significant! Processes: n Patterns of work n Routes to fulfil the objectives n Flows of activity to a defined end n Logical model Weighting: n Relative importance n Balance of priority n Comparative value in its own right, or in supporting higher goals Targets: n Thresholds of Pride n Quantified aspirations n Specific point which defines the edge of success n Numerical goal Measures: n Objective indicators of success n Quantified assessment of achievement n Represent a tangible effect / impact Clear objectives: n Things to achieve n Role of your organisation n How it serves n The difference it makes n What it wants to be QFD: A TOUR OF THE HOUSE 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 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 81115466388954 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 3 5 4 2 3 4 1 Wt. 1 2 34 5 6 7 7 8 8 1 Objectives 2 Approaches 3 Relationships 4 Weighting 5 Ranking 6 Correlation 7 Measures 8 Targets

16. Introduction Why-How Matrix How it Works Benefits Summary © Tesseract Management Systems / Managing by Design / 2001 - 15 REAL EXAMPLE OF BUSINESS DESIGN