A novel Flexible Manufacturing System (FMS) with customer-order based production is introduced using web-services technology and a real-time updatable inventory database to enhance operational efficiency of the manufacturing environment. The proposed FMS consists of intelligent control systems integrated with RFID technology, a smart conveyor system, robot arms and sorting mechanisms and a real-time updatable inventory database with application software. This study demonstrates the significance and benefits of a customer-order based production using smart conveyor system with the integration of RFID technology for product identification and handling, specifically in the manufacturing industry.