[The following article appears in the November 1994 edition of
_Public_Sector_Quality_Report_, pages 1 to 3.]

                          THE CUSTOMER'S VOICE:
                         AGENCY DEPENDS ON QFD 
                    TO "GET IT RIGHT THE FIRST TIME"

     How carefully does your organization listen to its
customers? Everyone says they listen. After all, isn't
understanding and responding to the customer what quality
management is all about?
     But do you really listen? And do you actually hear what your
customer is saying? Or do you tend to filter customer needs and
expectations through old paradigms, twisting what customers say
they want to fit what you thought they wanted, or what you hoped
they wanted, or perhaps what you already provide?
     If you suspect that problem in your organization, what if
there were a planning tool that could help you design, build, or
retool a product or service to precisely align with what your
customer wants and expects? A tool which works like a laser,
taking customer demands as its energy source, and focusing those
demands so intently that it can cut through old modes of thinking
and operating, to pinpoint a product or level of service that
truly will satisfy your customer.
     According to its advocates, there is such a tool. It's
called quality function deployment, or QFD.
     If you're not familiar with QFD, it was developed by Dr.
Yoji Akao in Japan during the 1960s. QFD is expressly designed to
help organizations understand, prioritize, and respond to
customer demands. Bob King, executive director of Goal/QPC, a
Massachusetts-based TQM training and research organization, is
credited with introducing Akao's concepts to North America in the
book Better Designs In Half the Time (ISBN 1-879364-01-8,
Goal/QPC).
     Mike Reagan, director of quality improvement at the Brainerd
Regional Human Services Center, one of eight state-operated
mental health facilities in Minnesota, describes QFD as "a tool
for amplifying the voice of the customer, so they will be more
likely to buy the product you're trying to sell."
     The center operates programs for treating mental illness,
chemical dependency, and developmental disabilities. In recent
months it has used QFD to first gather customer input on--and
then painstakingly design--two major projects. Those projects
included a new, more sophisticated accounting and financial
management system for the center's revenue-generating businesses,
and a first-of-its-kind neurorehabilitation hospital for
survivors of severe head injuries.
     The center's employees have been involved in quality
improvement activity for several years, but Reagan says he knew
he'd discovered a uniquely powerful planning tool when he
attended a Goal/QPC-sponsored QFD symposium in 1992. "We had
never before attacked developing a new product or service from
the viewpoint of trying to design features into it that address
customer requirements. That's what QFD enabled us to do," he
says.
     QFD uses the analogy of a house--the "House of Quality,"
specifically--to guide users through a series of planning and
analysis steps. Here's a brief look at the various "rooms" of
QFD, using the accounting system project as an example:
     
          -- Room 1-Whats (customer demands). 
     
          Customer input is gathered. The center conducted a
     focus group with nine managers who run revenue-generating
     programs (as opposed to those funded solely by state
     appropriation). The QFD team identified 13 major "demands"
     that customers had of a new accounting system, including
     easy-to-understand financial reports, reports delivered on
     time, and customized reporting capability.
     
          -- Room 2-Hows (quality measures). 
     
          Team members brainstormed indicators which might be
     used to measure whether customer demands are being met. They
     came up with 29, ranging from "percentage of accounting
     reports delivered on time" to "number of accounting forms
     businesses are required to fill out." Reagan notes that
     while the measures are largely hypothetical at this point,
     they can become "live" quality indicators once the new
     product or system is developed and implemented.
     
          -- Room 3-Relationships. 
     
          Here the first of several QFD matrices is created
     --demands listed on the left, measures across the top--to
     evaluate the relationships between the 13 demands and 29
     measures, and assign a score (strong, moderate, or weak) in
     each case. Explains Reagan: "What you're trying to determine
     is whether there's a logical relationship between what the
     customer is asking for and what we're proposing to measure."
          As a logic check, QFD offers nine "relationship rules"
     by which to judge whether demands and measures are in sync.
     For example, Rule 3 maintains that each row of the matrix
     must have at least one "strong" score. If not, the team has
     failed to identify a measure which properly tracks a
     customer demand.
     
          -- Room 4-Whys (importance ratings). 
     
          More customer feedback, this time a survey asking
     customers to rate (on a scale of l-5) the importance of each
     demand. In other words, all needs are not created equal.
     Responses are totalled and averaged to assign a "weight" to
     each demand.
     
          -- Room 5-Hows (importance ratings). 
     
          Which quality measures have the greatest correlation to
     customer satisfaction? Here each of the relationship scores
     from Room #3 is assigned a numerical value (strong=9,
     moderate=3, weak=1), then multiplied by the What weightings
     to establish an importance rating for each How.
     
     A complete "House of Quality" might have as many as three
additional rooms. Room 6 involves a "correlation matrix," where
the team compares "Hows" to one another to see if they either are
in conflict or in synergy. Room 7 can involve a benchmarking
exercise against the "competition," while Room 8 involves setting
improvement Goals--or "How Muchs"--for each measure.
     But Reagan says even a basic, five-room house of quality can
be used to begin evaluating product or service design options
based on customer demands. The team's next step after Room 5 was
to brainstorm the specific functions of an accounting system
--"what does this product do to help the customer."
     Using a tool called a "tree chart," the team developed a
matrix to plot those functions against customer demands (Whats)
and evaluate their relationship, to see which functions were most
critical to customers, and thus should be given extra care during
system design. A similar process was followed for "failure
modes." The team brainstormed ways an accounting system can break
down, then plotted those failure modes against quality measures
(Hows). Says Reagan: "By identifying the failure modes that will
have the greatest impact on customer satisfaction, it helps you
be sure to build counter-measures into your design, to make sure
those failures don't happen."
     Taking design considerations a step further, the team then
brainstormed optional system elements, and put them (along with
the quality measures) through what is known as a "Pugh Concept
Selection Matrix," to see whether each particular design
possibility would have a positive or negative impact on quality.
When all was said and done, the team identified a set of
accounting system "building blocks" that would have a positive
impact on customer satisfaction, and thus should be part of any
new design.
     As you might gather from even this brief description, QFD is
not for the faint of heart. Reagan says the team met for 90
minutes, twice weekly, for about five weeks to complete its
analysis. The hospital team, which started with a list of 31
customer demands and 79 quality measures, took considerably
longer.
     QFD software simplifies the process somewhat, creating the
complex matrices and performing the necessary calculations (the
center uses a software program called QFD Capture). But Reagan
insists the time and trouble are worth it; like panning for gold,
hard work which holds the promise of great reward. 
     In November the team presented a 13-point proposal for
design of an accounting system, a proposal which met with
enthusiastic approval from customers. As yet there's no data to
show the new system will satisfy customer expectations, but team
members are far more confident of their recommendations than they
would have been had they not gone through the rigorous QFD
exercise.
     "We have every reason to believe that, if we follow those 13
recommendations, we'll have a system that will do well on the
quality measures and meet our customers' expectations," Reagan
says. "With QFD there's a major investment of time up front, but
theoretically it reduces the overall design time and cost because
there should be a minimum of design changes that need to be
made."
     In terms of direct expenditures, the center's investment in
QFD has been quite reasonable. It cost about $1,000 for Reagan to
attend the symposium, and another $300 $400 for the software.
Reagan trained team members in basic QFD concepts of using a
slide-show presentation he developed. He also acted as an adviser
to each team as it went about its work.
     Is QFD the proper tool for every situation? Certainly not.
Because QFD demands such intensive analysis and effort on the
part of team members, Reagan suggests it be used selectively.
"Obviously it's a big investment of time and effort. so you don't
use it for trivial things, or when you're really short on time.
But you need to use QFD if it's totally critical that you get it
right the first time.
     "It's also useful when you have departments that need to
work together to come up with a joint solution, and there are
some barriers between them. QFD helps break down barriers because
it forces people to look at everything from the customer's point
of view, not their own department's. It provides that
discipline."
_____________________________________________________________
          QFD Resources: Want to learn more about QFD? Reagan
     suggests Goal/QPC's annual QFD symposium, and this book:
     Facilitating and Training in Quality Function deployment, by
     S. March, J.W. Moran, S. Nakui and G. Hoffherr (ISBN
     1-879364-18-2, Goal/QPC, $29.95).
     ______________________________________________________________

     CONTACT: Mike Reagan, director of quality improvement,
Brainerd Regional Human Services Center, Brainerd, MN (218)
828-2408. Goal/QPC, Methuen, MA (800) 643-4316 or (508) 685-3900.

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