The quality function deployment (QFD) theory focuses on customer needs and expectations and methodically deploys them through product design, parts selection, process planning and production planning, leading to shorter design times and more customer‐oriented products. It is demonstrated that the QFD techniques can also improve the procedures that are used to formulate annual policy. Therefore a conceptual procedure is presented to formulate annual policy based on QFD techniques, and a case study is presented in which it is demonstrated that the QFD theory can function as an indicator of problems that have to be faced if one wants to improve towards more customer orientation and better communication, cross functional as well as between lower and higher management in the policy formulation process.