Service-oriented manufacturing: A new product pattern and manufacturing paradigm

Service plays an increasingly important role in modern manufacturing: (a) Services and physical products are integrated into one product service system (PSS) to provide a comprehensive solution for customers; (b) The companies involved in offering PSS focus on specialized sectors, and provide producer services for one another. In this paper, the new product pattern together with the innovative manufacturing paradigm is called service-oriented manufacturing. The competitive advantage of a PSS can be originated from products or services, and the ownership of PSS's may or may not be transferred from sellers to buyers during transactions. Various PSS's were categorized into three classes. The characteristics of each type of PSS's and the shift between them are discussed. Many companies, which provide producer services and manufacturing services to one another, form a service-based manufacturing network. The reasons why producer services act as intermediate goods among different companies and motivations for companies to outsource their business processes are analyzed economically. Many companies in different segments of the production-chain may have discrepant profitability. Technology strength and industry insight competences are adopted to explain the discrepant values added from various segments along the production chain. Service-oriented manufacturing is summarized from the perspectives of business model, industry insight and technology strength (BIT).