Manufacturing industry is undergoing a major transformation from production-oriented business to service-oriented business, inspired by the advancement of smart technologies and sophisticated demand for product-service systems from the dynamic market. Cloud manufacturing is emerging as a key enabler for manufacturing companies to deliver highly customisable services over the Internet. This paper aims to investigate how cloud manufacturing systems is able to facilitate effective service-oriented business. Major challenges in developing a cloud-based manufacturing marketplace are discussed. A system framework for cloud-based service provision is proposed. © 2014 IEEE.