In today's insecure economic conditions, businesses of all sizes are working hard to manage cash flow. Putting the brakes on supply chain expenses is one way to help keep things on the positive side. This is especially true for retailers, but also applies to expendable items in other businesses.

For many small businesses, things have slowed down considerably. Controlling inventory costs and the cost of supplies can make a big difference on the bottom line, and may be crucial for survival.

There are a number of ways you can work on cutting these costs. You have to continue to fill your customer's needs, but adjusting to decreasing customer demand is a crucial step in staying afloat.

• Stay in touch with vendors. Your vendors are more than aware of current conditions, and will be interested in working with you to retain you as a customer. Talk to vendor representatives and regional sales managers frequently. Make sure you know about special offers and pricing strategies that may help you.
• Be smart in managing inventory. If your sales are down, you may need to adjust inventory reordering thresholds and restocking practices. If you use an automated reordering system, consider making adjustments that will maintain inventory at a lower level to match sales. If vendor representatives stock your displays, inform them of changes. Pay special attention to standing orders. You may need to reduce quantities.
• Renegotiate your discount structure. As ordering quantities decrease, you may fall below discount thresholds with vendors. In that situation, contact the vendor and try to arrange lower thresholds on a temporary basis, until business picks up. You may also be able to increase ordering intervals to maintain discount minimums.
• Check out competing vendors. If you're not locked into a single vendor through a franchise contract, now is the time to take a look at other vendors for both inventory and supplies. Vendors are in the same business situation you are, and you may find increased competition for your orders.
• Take advantage of vendor sales and blowouts. Make frequent visits to vendor web sites to check for reduced prices and blowout items. Passing along reduced pricing on such items through well-advertised sales can mean increased customer visits and better profits.
• Eliminate stale or slow-moving products. Identify individual items and product lines that aren't moving. Offer deep discounts to your customers to move these dust-gatherers out and recover their costs. Don't reorder until things improve.
• Enlist your staff in identifying problem areas. Now is a perfect time to get your sales, stockroom, and accounting staff to watch for and report inventory surpluses and shortages. Remedy such problems as quickly as you can.
• Consider non-traditional supply sources. How many times have you been in a big-box retailer and found items you stock selling for less than your wholesale cost from a vendor? It's an old story. Don't just grumble about it. Buy it. This is another place to enlist your employees. Ask them to report such opportunities.
• Re-evaluate consumable purchases. Everything from office paper products and packaging/shipping supplies to break room and janitorial supplies should get a close look. All too often, these areas get examined too rarely. Where equivalent supplies are available at lower prices, consider switching. Evaluate your vendors, too. If you're buying from a vendor simply for convenience, you may be paying more for such products than necessary.

Taking a hard look at vendors and looking for opportunities to save is one excellent way for you to tip the balance your way. You may have to break some old habits and even change vendors, but the health of your business may depend on getting a handle on the supply chain.