Ongoing vendor risk monitoring involves regularly reviewing vendor compliance, financial health, cybersecurity posture and adherence to SLAs. Companies can use automated tools to track certifications, licenses, document expirations and unusual system activity. Early warning signs such as repeated breaches, declining financial performance, lack of transparency or recurring service failures indicate that a vendor may no longer be reliable, helping businesses act before risks escalate.

The most essential KPIs for vendor performance management include SLA compliance, on-time delivery, defect or error rates, cost efficiency and ROI, vendor risk and compliance indicators, and the level of innovation the supplier brings. These metrics help procurement teams objectively evaluate whether vendors are meeting expectations, delivering value and operating safely. Tracking these KPIs gives you clearer visibility, reduces operational risks and ensures vendors are accountable for performance throughout the engagement.