The emergence of manufacturing related services (MRS) coincides with the revaluation of manufacturing. We observed that manufacturing-focused countries overcame the financial crisis which broke out in 2007 with less difficulty than their service-focused counterparts. Manufacturing played a crucial role in navigating the economic problems such as unemployment, polarization and stagnant growth and so on. Moreover, this pattern of positive impacts from the manufacturing sector was observed from European countries trying to boost their economy. Germany, a manufacturing-driven economy, showed continuous economic growth, while service-driven economies in Greece and Austria experienced recession. Therefore, the importance of manufacturing was revaluated and commonly shared. However, the manufacturing sector we are revaluating now is not what it once was. Interestingly, manufacturers do not only manufacture any more. Instead, their activities increasingly involve services. According to a 2012 report from McKinsey, more than 34 percent of U.S. manufacturing employees are involved in service areas, or service-like activities. These service-like-activities include research and development, engineering, design, marketing and customer services which are sources of high value added and high quality jobs. In short, these changes allowed manufacturing to overcome financial crises and energize economies with trickle-down job creation, upgrades in the industrial value chain and new demand for professional services.Those changes are attributed to a paradigm shift in the manufacturing industry which is observed in various areas. First, new types of products have appeared in the market. These new products are described as smart, connected products (SCP) by Michael Porter (2014). SCP are differentiated from existing or previous products in that they consist of different components and work in different ways. As components, they are smart and connected to networks, and must be embedded in operating systems or user interfaces for optimal utilization. In addition, SCP are connected through either wired or wireless connections for auto-updating. SCP monitor, control and optimize themselves autonomously.The emergence of these types of products requires manufacturers to cope with a new environment with appropriate solutions. Manufacturers are expected to form new technology infrastructure, including product related hardware and software, cloud servers for remote control of the product and security protocols. Moreover, these new products are capital expenses, expected to result in relatively higher fixed costs and lower variable costs for manufacturers. Higher fixed costs result from the expenses induced in developing software, designing interfaces and acquiring other technological capital. In the end, manufacturers are expected to become providers of whole product systems and not simply makers of individual products. Therefore, core competencies of manufacturers will be determined by competitiveness at the system level.The second type of paradigm shift is found in the value creation. Previously, production activity itself was the main source of value in manufacturing. However, the main source of value now comes from services which are applied before and after production. To provide services as a source of value, manufacturing firms are now shifting production to smart products (in contrast to previously “dumb” products) through which services can be integrated.In summation, products, competitiveness and value creation are rapidly evolving in the manufacturing sector. However, manufacturing firms are not able to deal with this situation by sticking only to production process. Convergence with various services is necessary for the firms effectively respond to a changing environment. This necessitates that manufacturers utilize MRS
