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QUALITY FUNCTION DEPLOYMENT (QFD) is a systematic method for transferring customer wants/needs/expectations into product and process characteristics.
It was developed by Shigeru Mizuno (1910-1989) and Yoji Akao (b.1928) in Japan and is hinshitsu kino tenkai in the native language.

QFD is an excellent tool for communication between cross-functional groups as it provides a common basis for:

• Integrated Product Development
• Simultaneous Engineering
• Concurrent Engineering

QFD work divides into four parts

• market analysis to establish needs and expectations
• examination of competitors abilities
• identification of key factors for success
• translation of key factors into product and process characteristics

Conjoint Analysis (market survey)

• potential customers asked to rank a number of product concepts
• important factors chosen by factorial design with two levels (statistical design of experiments)

Analysis of competitor products should:

• go on continuously
• subject them to same scrutiny as own company products

Toyota halved design costs and reduced development time by 1/3 after starting to use QFD

The four stages required for a full QFD are:

• Product planning - the House of Quality
• wishes of customer transferred to product
• evaluation of competitor products
• identification of important properties
• Product design - parts deployment
• choose best design to fulfil targets
• identify critical parts and components
• further R&D if needed
• Process design - process planning
• critical parameters identified
• process control/improvement methods set
• Production design - production planning
• design instructions for production
• define measurements, frequency and tools to be used

The first block, the House of Quality, will normally look like this Figure, although a comparative analysis against the competitors product is often added to the right and below the matrix.  The full QFD matrix will then normally look like this Figure.
A template for QFD analysis can be found on a link from the University of Western Ontario Faculty of Engineering webpage for module ES 050 - Introductory Engineering Design and Innovation Studio

Chan and Wu [1] undertook a literature review based on 650 QFD publications and identified ten key publications [2-11] offering "comprehensive coverage of [the] historical, conceptual, methodological and practical aspects" of the technique.  Evans and Burns [12] reported the findings of three research methods (murmur of the customer, delighter clinics and delighter self-report exercise) used to study customer delight during product evaluation.  By combining their empathic design process with tools such as QFD and measures of return-on-investment, they suggest that an ideal design might be achieved.

Reference

1. Lai-Kow Chan and Ming-Lu Wu, Quality function deployment: a literature review, European Journal of Operational Research, 16 December 2002, 143(3), 463-497.
2. AT Bahill and WL Chapman, A tutorial on quality function deployment, Engineering Management Journal, 1993, 5(3), 24-35.
3. L Cohen, Quality Function Deployment: How to Make QFD Work for You, Addison-Wesley, Reading MA, 1995.  PU CSH Library.
4. JJ Cristiano, JK Liker and CC White III, Customer-driven product development through quality function deployment in the US and Japan, Journal of Product Innovation Management, 2000, 17(4), 286–308.
5. RG Day, Quality Function Deployment: Linking a Company with Its Customers, ASQC Quality Press, Milwaukee WI, 1993.
6. CPM Govers, What and how about quality function deployment (QFD), International Journal of Production Economics, December 1996, 46-47, 575-585.
7. JR Hauser and D Clausing, The house of quality, Harvard Business Review, 1998, 66(3), 63-73.
8. A Hill, Quality function deployment, Chapter 21 in D Lock (editor), Gower Handbook of Quality Management - second edition, Gover, Brookfield VT, 1994, pp 364–386.  PU CSH Library.
9. B Prasad, Review of QFD and related deployment techniques, Journal of Manufacturing Systems, 1998, 17(3), 221–234.
10. JB ReVelle, JW Moran and CA Cox, The QFD Handbook, Wiley, New York, 1998.
11. LP Sullivan, Quality function deployment, Quality Progress, 1986, 19(6), 39–50.
12. S Evans and AD Burns, An investigation of customer delight during product evaluation: implications for the development of desirable products, Proc IMechE Part B, Journal of Engineering Manufacture, 2007, 221(11), 1625-1640.

URLs for Quality Function Deployment (QFD) (checked as live on 01 February 2007):

• International Council for QFD (ICQFD)
• Quality Function Deployment (QFD Institute)
• What is Quality Function Deployment? (Becker Associates)
• QFD - A core PQM expertise (Pardee Quality Methods)
• Planning Customer-Focused Products - Quality Function Deployment (iti-oh.com)
  • QFD/Capture software
• Customer-Focussed Development with QFD (Kenneth Crow - DRM Associates)
• Product Planning and Requirements Definition using QFD (DRM Associates)
  • Auxiliary Power Unit Product Planning Matrix
  • Refrigerator Product Planning Matrix