Top Challenges in Vendor Compliance—and How to Overcome Them
Nov 10, 2025
Managing vendor compliance isn’t always straightforward. Businesses often face multiple challenges that make the process complex and time-consuming. Below, we’ll explore the top challenges in vendor compliance and practical strategies to overcome them.
1. Lack of Visibility Into Vendor Operations
One of the biggest obstacles organizations face is the limited visibility into how vendors operate behind the scenes. While vendors may provide documentation or attest to compliance, businesses often struggle to confirm whether those claims are accurate.
Without transparency, it becomes difficult to assess risks related to data security, labor practices, financial stability, or regulatory adherence.
How to overcome it:
Conduct regular vendor assessments and audits to verify compliance beyond self-reported data.
Use vendor risk management (VRM) platforms that centralize vendor data and provide real-time insights.
Establish clear reporting requirements so vendors are held accountable for transparency.
2. Keeping Up With Evolving Regulations
Regulatory requirements are constantly changing—whether it’s data privacy laws (GDPR, CCPA), financial regulations (SOX, PCI DSS), or industry-specific standards (HIPAA, ISO 27001). Vendors operating across multiple regions may face even more complex compliance obligations.
The challenge for organizations lies in tracking these updates and ensuring that vendors are aligned with all relevant standards.
How to overcome it:
Subscribe to regulatory monitoring services to stay informed about new laws.
Incorporate regulatory updates into vendor contracts, requiring vendors to remain compliant as laws evolve.
Provide compliance training and resources to vendors to help them stay up to date.
3. Inconsistent Vendor Risk Assessments
Not all vendors pose the same level of risk. A supplier providing office supplies has different compliance concerns compared to a cloud service provider managing sensitive customer data. Unfortunately, many businesses apply inconsistent or ad hoc risk assessments, leading to blind spots.
This inconsistency makes it hard to prioritize which vendors need deeper scrutiny and which ones can be monitored with lighter oversight.
How to overcome it:
Adopt a tiered vendor risk assessment model—categorizing vendors by criticality and risk exposure.
Use standardized questionnaires and scoring systems to ensure consistency in evaluations.
Continuously re-evaluate vendors as their role in your operations changes.
4. Limited Resources and Manual Processes
Many compliance teams still rely on manual tracking methods, such as spreadsheets and email exchanges, to manage vendor compliance. This approach is not only inefficient but also prone to errors and delays—especially when dealing with hundreds of vendors.
Small compliance teams often find themselves overwhelmed, unable to manage the workload effectively.
How to overcome it:
Implement automation tools and VRM software to streamline vendor onboarding, document collection, and monitoring.
Leverage artificial intelligence for tasks like document verification and risk scoring.
Consider outsourcing certain aspects of vendor compliance, such as background checks or due diligence, to specialized firms.
5. Vendor Resistance or Lack of Engagement
Some vendors may view compliance requests as burdensome or unnecessary, leading to delays in submitting required documentation or completing assessments. This lack of cooperation can stall compliance programs and increase risk exposure.
In some cases, smaller vendors may lack the resources or knowledge to fully comply with complex regulations.
How to overcome it:
Clearly communicate the importance of compliance as a shared responsibility.
Provide vendors with guidance, templates, and training to make compliance easier.
Build compliance obligations into vendor contracts and service-level agreements (SLAs) to ensure accountability.
6. Data Security and Privacy Concerns
Vendors often have access to sensitive company or customer data, making them potential entry points for cyberattacks or data breaches. In fact, third-party data breaches have been a growing trend in recent years, putting organizations at risk of reputational damage and hefty fines.
The challenge lies in verifying that vendors are following robust cybersecurity and privacy practices at all times.
How to overcome it:
Require vendors to meet recognized security standards (ISO 27001, SOC 2, NIST).
Conduct penetration tests and security audits to validate vendor controls.
Establish data-sharing agreements that define responsibilities and breach notification protocols.
7. Difficulty in Ongoing Monitoring
Compliance is not a one-time task—it requires continuous monitoring. Many organizations perform due diligence during onboarding but fail to track vendor compliance over time. Without ongoing oversight, risks can emerge undetected.
How to overcome it:
Schedule regular compliance reviews and audits.
Use real-time monitoring tools that flag potential compliance gaps immediately.
Develop a vendor scorecard system to measure ongoing performance and compliance health.
Vendor compliance is a complex but vital part of modern business operations. The challenges—ranging from lack of visibility to evolving regulations—can expose organizations to financial, legal, and reputational risks if left unaddressed.
By investing in technology, standardized processes, and strong communication with vendors, businesses can build a more resilient compliance program. Ultimately, overcoming these challenges not only reduces risk but also strengthens trust and collaboration with third-party partners.
In a world where supply chains and vendor ecosystems are increasingly interconnected, effective vendor compliance management is no longer just best practice—it’s a competitive advantage.