Modern supply chain management has been widely used in manufacture and retail business. Many companies have realized SCM plays a pivotal role to success and gives company competitive advantage. Chinese firms have learned knowledge of SCM from foreign firms. But the achievements are not outstanding; one of the barriers is traditional Chinese distribution network. Therefore Chinese companies face challenges when they apply supply chain management in China. Meanwhile, innovation and SCM implementing would take opportunities to Chinese firms. This thesis focuses on one participant in supply chain, which is called exclusive distributor. The main purpose of this thesis is to find out how traditional Chinese distributors meet challenges by new competitors and new situations. Case study is the main research approach. The objective of research is one Chinese local exclusive distribution company, named Jia Heng. The data collect from article review and e-mail interview, which provide theoretical and empirical finding.

Information and knowledge of SCM is not completely known well by small local Chinese companies. And the traditional logistics system and mind influence its performances. Inventory level control is one of the problems that exist in those companies. Cost deceasing and value adding can be achieved via effective SCM. Differences between different roles in the supply chain has been detected and significant factors and shown in a radar map. Established physical distribution agents trend to remove, because it is a beneficial way to decrease costs for the buyers and sellers. Disintermediation is a threat for Chinese exclusive distributor. In order to survive in the competition, Chinese exclusive distributor should launch a revolution for its business. SCM is an optimal strategy for them. EOQ is an effective model to the solve inventory level control problem. The suggestion of company is “know SCM, do SCM and popularize SCM” process step by step, and it can help company to gain competitive advantages. The radar map can remain each role to review its company, and improve its performance by the different factors.