An issue with a vendor can easily turn into a bigger problem. You should take steps to handle the situation as soon as possible.
The best course of action is to keep the lines of communication open as this is often enough to resolve any issues and prevent complications.
You should have set expectations when you first signed the vendor contract, but you may need to reiterate them at some point. You should also go over how their current work is not meeting the expectations you had set. Make sure you and the vendor are on the same page. Address any questions or issues they may have meeting the expectations.
Tackle the issue head-on
If there is a specific problem, make sure you clearly define it. Discuss it with the vendor directly. Make sure they understand what has gone wrong, and offer potential solutions. Allow the vendor to also offer options to you.
Consider a trial basis
If you reach a potential solution, consider implementing it and instituting a trial period. Doing this will allow you to see if the situation resolves or if this is a bigger issue that requires further action.
Ensure the partnership still works
If you have completely discussed what is going wrong and there does not appear to be a satisfying solution, then you may want to evaluate the partnership. Consider if the vendor can continue to meet your needs or if it is time to move on.
You cannot ignore problems with vendors. It can damage your business. Sometimes, the only solution is to part ways.