How to Track SLAs Against the Vendor Contract: A Complete Guide

When you sign a vendor contract, you’re not just agreeing to pay for products or services  you’re also setting expectations for performance. These expectations are captured in Service Level Agreements (SLAs), which define measurable standards like uptime, response time, delivery schedules, and quality benchmarks. 

But writing SLAs into a contract is only the first step. The real challenge  and where many organizations struggle  is tracking SLAs consistently and accurately. Without a clear tracking process, you risk service gaps, hidden non-compliance, and even financial loss. 

This guide will walk you through how to track SLAs against your vendor contract effectively, helping you strengthen vendor relationships, ensure compliance, and get the most value from your partnerships. 

What Are SLAs and Why Do They Matter? 

A Service Level Agreement (SLA) is a documented commitment that defines the expected level of service a vendor must provide. It typically includes: 

• Performance metrics – measurable standards like system uptime (e.g., 99.9%), response times, or delivery speed. 

• Measurement methods – how performance will be monitored and reported. 

• Penalties or remedies – what happens if the vendor fails to meet the agreed levels. 

  
  

SLAs are essential because they hold vendors accountable and give you a clear benchmark for performance. Tracking them ensures that your vendors are delivering on their promises and that your organization is receiving the quality and reliability it’s paying for. 

Step 1: Define Clear, Measurable SLAs in Your Contract 

Effective tracking starts with well-defined SLAs. If SLAs are vague or difficult to measure, monitoring them will be nearly impossible. Before signing the contract, make sure that each SLA: 

• Is specific and measurable (e.g., “Delivery within 5 business days” instead of “Timely delivery”). 

• Includes a measurement method (e.g., system logs, ticketing data, or delivery receipts). 

• States the reporting frequency (e.g., monthly performance reports). 

• Lists remediation steps or penalties if the SLA is missed. 

  
  

Pro Tip: Involve stakeholders from procurement, legal, and operations when drafting SLAs. This ensures they’re practical, enforceable, and aligned with your business goals. 

Step 2: Centralize Your Vendor Contracts and SLAs 

Tracking SLAs effectively becomes much easier when all vendor contracts and performance data are in one place. If your contracts are scattered across email threads or file folders, you’re more likely to miss obligations or overlook non-compliance. 

Use a centralized contract management system or a vendor risk management platform to store: 

• Contract documents and SLA clauses 

  
  

• Performance metrics and reports 

• Communication logs and dispute history 

  
  

This creates a single source of truth, allowing teams to access the information they need quickly and ensuring that no SLA is forgotten. 

Step 3: Establish a Performance Monitoring Process 

Once the contract is active, you need a structured way to monitor vendor performance. Here’s how to do it: 

1. Identify data sources – Where will you get performance data? This could include vendor reports, internal system logs, customer support tickets, or delivery records. 

   
   

2. Automate data collection – If possible, automate the collection of key metrics. For example, system uptime can be tracked automatically, while delivery performance might be logged through an ERP system. 

   
   

3. Set reporting intervals – Monitor SLAs at regular intervals (monthly or quarterly) rather than waiting until contract renewal. Frequent checks allow you to catch issues early. 

   
   

4. Compare actual performance against SLAs – Use dashboards or reports to visualize how the vendor is performing relative to the agreed standards. 

   
   

Example: If your SLA requires 99.5% uptime and the system logs show 98.7%, you immediately know the vendor is underperforming — and can take action before the issue escalates. 

Step 4: Communicate Performance Expectations Clearly 

Tracking SLAs isn’t just about internal monitoring — it’s also about maintaining open communication with your vendors. 

• Share performance dashboards or reports with vendors regularly. 

  
  

• Discuss trends — highlight areas where they’re excelling and where improvement is needed. 

  
  

• Hold quarterly business reviews (QBRs) to review SLA compliance and align on future goals. 

  
  

This approach fosters transparency, encourages accountability, and strengthens your vendor relationships. 

Step 5: Implement Escalation and Remediation Procedures 

Even the best vendors will occasionally miss an SLA. What matters most is how you handle it. Your contract should outline clear remediation steps such as: 

• Grace periods or corrective action plans 

• Financial penalties or service credits 

• Termination clauses for repeated non-compliance 

When a breach occurs, follow these steps: 

1. Document the incident – Record the date, nature of the breach, and evidence. 

   
   

2. Notify the vendor – Communicate the breach promptly and professionally. 

   
   

3. Collaborate on a resolution plan – Work with the vendor to correct the issue and prevent recurrence. 

   
   

By consistently following this process, you protect your organization’s interests while maintaining a professional relationship. 

Step 6: Use Technology to Automate SLA Tracking 

Manual SLA tracking is time-consuming, error-prone, and difficult to scale. Modern vendor management systems (VMS) and GRC platforms offer automation tools that simplify the entire process: 

• Automated performance data collection from multiple sources 

  
  

• Custom dashboards to visualize SLA compliance 

  
  

• Real-time alerts when SLAs are at risk of being breached 

  
  

• Audit-ready reports for compliance and governance reviews 

  
  

Automation not only saves time but also ensures that SLA tracking is consistent, transparent, and aligned with organizational goals. 

Step 7: Continuously Review and Improve SLAs 

Vendor performance needs to evolve over time and so should your SLAs. Conduct regular reviews (at least annually or during contract renewals) to assess: 

• Whether current SLAs are still aligned with business needs 

  
  

• If new metrics should be added based on changing priorities 

  
  

• How vendors are performing over the long term 

This ongoing optimization ensures that your contracts continue delivering maximum value. 

Tracking SLAs against vendor contracts is more than a compliance task, it’s a strategic practice that drives accountability, protects your business, and builds stronger partnerships. 

By defining clear SLAs, centralizing contracts, automating performance monitoring, and maintaining open communication with vendors, you gain the visibility and control needed to ensure every vendor delivers on their promises. 

In an era where third-party performance directly impacts business outcomes, effective SLA tracking is not optional, it’s essential.