Evaluating Your Vendor Management With KPIs

Vendor management is analyzing and monitoring of the quality, performance, and reliability of the company’s vendors. It’s a system that boosts your business profits and efficiency, reduce inventory costs and stock levels.

However, maintaining vendor management can be unnerving as it requires constant and reliable real-time information about profitability, vendor’s performance, and formal procedures. Fortunately, technology has breached these gaps.

Business people are using KPIs in vendor management

The Key Performance Indicators- KPIs in short- help in measuring vendor management. They also help in determining the performance of your vendors and how they comply with the defined controls.

Determining How Good Your Vendors Are

A robust program designed to boost the performance of the vendors who matter leads to reduced costs. The KPIs should be based on risk assessment. And before you measure the vendors’ cybersecurity, decide which third-parties place your business at risk. To measure individual vendors’ performance, you need to evaluate the following:

  • Information They Access – You need to differentiate between highly sensitive data and moderately sensitive data before you allow the vendor access.
  • Systems They Access – Access to vital security systems will be provided to vendors based on responsibilities, job function, and business requirements.
  • Importance to Continued Business Operations – The business industry is experiencing a dynamic change where vendors are partnering with business owners to develop healthy relations that go beyond the initial implementation stage. There are some circumstances where the company may not be in a position to handle some tasks due to lack of an efficient system. Through a cordial relationship with vendors, they can help in implementing software to help your company focus on improving customer service.

A high-risk vendor will be able to access a network or system vital to your company or even gain access to protected information. That’s why it requires the vendor to get evaluated more than other vendors.

When you store vital business information on the cloud, you’ll be required to monitor the cloud service provider’s security continually. However, if you’re storing public information like whitepapers, then you don’t need to restrict or monitor vendor regularly.

Setting up KPIs for vendors

Setting KPIs for Vendors

Before setting the KPIs for your vendors, you need to evaluate the service level agreements- SLAs. Let’s see how you can set KPIs for your vendors:


If you want the vendor to meet specific compliance standards, you should first have a look at audit reports to review and evaluate how they manage their compliance. You should steer clear of any vendor whose compliance shows a security problem.

Security Patch Management

This might be hard to track because you cannot be in the vendor’s company accessing their systems all the time. But if a single system lacks a security patch, it can put the vendor at risk of losing vital information.

Reported Cybersecurity Events

In today’s world, cybersecurity is paramount. Although organizations might have a few cases of breached data, the occurrence of the same incidents should make you question your relationship with your vendor. If you cannot find any information online, the vendor is fully responsible for informing you of any breach.

Workforce Training

You should take time to review training records to get invaluable information on how well the vendor’s workers understand their roles and responsibilities. This evaluation gives you a clear picture of the culture of the vendor’s management. If the scores are low, it indicates that the staff is not aware of cybersecurity and might put your information at risk.

Businessman is using automation solution for vendor KPI reviews

Using Automation to Review KPIs

To maintain a vendor management program, you first need to have insight into how your vendors are managing their data systems. Here is how to use the automation to review the Key Performance Indicators:

Communicate with Vendors

Always keep in touch with your vendors. If you notice any data breach, make sure you document the oversight and inform the vendor. These might lead to changes from the vendors’ side, but, ensure you convey your concerns.

Focus on Reviews

The high-risk vendor process and control information is vital to your company operations. If you have invested in an automated system, you will get high-priority alerts of your vendors for you to monitor them often.

Use Automated Review Process

If you want to maintain a robust, effective, and reliable vendor management program, then, think about using an automated system. Automation creates a smooth workflow for reviewing vendor records.

Prioritize On Details

Pay close attention to the details provided in the report; check whether there is any breach that occurred. More so, check the time it took for the breach to get recovered and how. The longer the vendor takes to recover the breach, the less you can trust them.

Monitor the Vendor Often

Do not entirely rely on the information given by the vendor. Monitor their security system more often. The audit and SOC report only provide information at a given moment. Luckily, the automated system offers you visibility into vendor’s data control program to help you measure their compliance.

Vendor cyber security

Review the Vendor’s Cybersecurity

Your SLA should outline the security requirements. If you get information about the vendor security via your automated system, then you can use the information to check the vendor’s compliance with the contract.

You can use specific language to address the encryption and to gain access. The SLA should also give insight into the amount of time taken to recover from cyber-attack. But if the report indicates that the vendor did not meet the timeline, then you should start having a conversation about continuing the business relationship.

Putting It Together

Vendor management has been made easier with the implementation of KPIs. Both vendors and purchasers see the benefit of VPM to the extent that it’s becoming a regular practice in business and is a key component of protecting sensitive data to avoid fines and unfavorable press.