Abstract: This research, based on the “Smiling Curve” of industrial value chain, establishes a pattern of value chain regarding supply chain service industry, including innovative strategies and paths according to relevant innovative theories. Then the methods of exploratory and case study are adopted to illustrate the mechanism. Furthermore, this study achieves three viewpoints. Firstly the supply chain enterprise can execute four business model innovative strategies through managing physical flow, fund flow, information flow and business flow. Secondly, it can follow the unique and intensive innovative, comprehensive and extended innovative paths to implement the innovation. Finally, it is fundamental to measure the key sources and capabilities owned by the innovators, and implement the business innovation based on the value chain pattern of supply chain service industry.

Key words: supply chain, business model innovation, production-based service industry, value chain, smiling curve