Quality Begins At Home

Ed Leofsky is, according to those who know him, a "meek, rather mild-mannered" process engineer at the Fairview, Pa., Electromagnetic Division of Spectrum Control Inc. But for 12 years, Leofsky lived with a thorn in his side.

Each week, Leofsky's division makes use of some 75,000 tubular ceramic capacitors, which are manufactured at Spectrum's Material Science Division in near-by Saegertown. The Electromagnetic Division solders terminals to the capacitors, which are then used in the electronic filters that are the company's main product. If, for some reason, the solder won't stick, Leofsky has a problem. Maybe thousands of them.

"It had been an intermittent problem, a serious problem, for as long as I'd been here," Leofsky says, "but we'd never gotten to the root causes." When soldering defects showed up, he had to have every item inspected with a microscope, a tedious, time-consuming process. Occasionally, Leofsky could fudge the manufacturing process enough to use poor-quality capacitors; but that, too, wasted time. Although he had discussed the situation over the years with H. Jack Baker, vice-president of engineering at Saegertown, the two had arrived at no solution. Finally, Leofsky had come to think of poor solderability as falling in the same category as death and taxes: not pleasant, but not up for debate.

Then, a year ago, two things happened. With a good deal of fanfare, Spectrum president and chairman Thomas L. Venable announced the advent of a new, companywide commitment to quality. Meanwhile, in Leofsky's department, the reject rate began to climb. By October, nearly a third of the capacitors wouldn't accept solder.

That was the point at which quiet Ed Leofsky decided he had had enough. Emboldened by the quality credos, classes, and posters that were cropping up all over Spectrum, he wrote a scathing memo to Baker and sent copies to everyone he could think of. "The albatross is upon us," he announced. "Rejects of . . . incoming material jumped from 3% in August 1984 to 32% in October. . . . Approximately 50% to 75% of engineering time is now being . . . diverted [by this problem]."

"At the time," Leofsky recalls, "I was thinking, 'Let's see if there's anything to this quality program."

"What he did," remembers Venable with a rueful smile, "was shut that department down -- and it was a department that accounted for 35% to 40% of the sales of the group."

Only rarely is the cost of poor quality -- and the cost of upgrading a company's quality standards -- thrown into such stark relief. But if Venable was surprised by Leofsky's dramatic action, he had to be pleased as well. It was just such an attitude that he and the other top managers at Spectrum had set out, some months before, to cultivate.

Spectrum, headquartered in Erie, Pa., was founded in 1968 by Venable, Glenn L. Warnshuis, and John R. Lane, three engineers who had met at Erie Technological Products Inc. In 16 years, the company grew from a $300,000 start-up housed in an old hardware store to a solid, $22-million public company. Today, Spectrum has four manufacturing plants and some 1,500 customers, including the likes of IBM Corp. and Hewlett Packard Co. For the past three years, it has reported after-tax returns of about 10% of sales.

In the early days, quality wasn't an issue. Venable and Warnshuis designed and built Spectrum's sophisticated filters, while Lane marketed them. "There wasn't any point in making them wrong," Venable says with a chuckle. But, as the company began to prosper and grow, that kind of hands-on responsibility fell by the wayside. "You probably lose control somewhere between 15 and 20 people," he reflects.

Like most manufacturers -- and like most businesses -- Spectrum began to operate on the philosophy of acceptable-quality levels, or AQLs. The company regularly checked a sample of the product, then shipped the whole batch, so long as the number of bad units fell within accepted limits. If there were too many bad ones, the lot was rejected, or subjected to 100% inspection, an expensive process.

Then, slowly, Spectrum's marketplace began to change. A Japanese company, Murata Manufacturing Co., purchased Erie Technological Products (now Murata Erie North America Inc.), with which Spectrum competed, and raised the specter of Japanese-style quality. Several of Spectrum's customers began to make noises about quality as well. "About two or three years ago," says Venable, "Hewlett Packard said that they were going to switch to the idea of 'zero defects' -- no defects in any inbound materials." Soon IBM was joining the chorus -- and implying, Venable remembers, that a business hoping to remain an IBM supplier better begin thinking seriously about quality.

Equally sobering were developments within Spectrum itself. "Our sales and marketing people began to tell us that we weren't very good at meeting schedules," says Venable, "and, in certain product lines, the reject rate began to climb."

Venable and other Spectrum managers began to assay likely strategies for attacking the newly discovered issue. They took a look at some Japanese quality techniques, but decided that the techniques would clash with the company's laid-back, American style. They bought 40 copies of Quality Is Free by management consultant Philip Crosby, a book that IBM had been pushing, and passed them out. They also bought and studied some videotapes featuring W. Edwards Deming, the dean emeritus of statistical control of quality. Surveying the options, Spectrum's managers came to the conclusion that the world was divided into Deming and Crosby camps, and that newcomers in search of quality were expected to enlist in one or the other.

Deming, a physicist-turned-statistician, was one of the principal inventors of statistical control, an approach that relies heavily on mathematical models to achieve and maintain quality levels. He was responsible for so many Japanese manufacturing breakthroughs that Japan's highest industrial award is known as the Deming Prize. Since the late 1970s, he has been accorded more attention and honor at home; one reviewer recently called him "the father of the Third Wave of the industrial revolution."