In the past, low cost operation and high flexibility of suppliers are two key competitive advantages for Taiwan's precision machinery industry. During current global competitive environment, more and more customer demands shorter lead time and mass customization products. To face these new challenges, efficient supply chain is the only way for companies to survive. In the research, the concept of value chain is used to analyze the competitive advantages and disadvantages of Taiwan's precision machinery industry from the standpoint of global competition. After the added value in Taiwan's precision machinery industry is found, a network of the supply chain will be constructed and be evaluated.