Zimmer Biomet’s Major Transformation Disrupted by Weak Supplier Management

Note: This case study is based on public allegations and commentary. The legal position is still evolving. The point here is not to assign blame. It is to highlight what boards and executives can learn about managing large system integrators through strong supplier relationship management.

A single ERP to unify a global business

When Zimmer and Biomet merged, the new organisation found itself running several ERP systems across more than 100 countries. Zimmer Biomet launched a large SAP S4HANA programme across North and Latin America to simplify operations and bring multiple platforms onto a single system.

The work was placed with a long-standing consulting and systems integration partner. The initial work order was valued at around 69 million dollars. That later grew to roughly 94 million dollars after 51 change orders. The intent was to deliver a strategic, minimal-customisation approach that would consolidate multiple ERPs into one.

Go-live dates moved several times. The system finally went live in North America in July 2024. According to the legal complaint, the go-live caused significant disruption across warehouse operations, order to cash and finance, with teams resorting to manual workarounds while the system was stabilised.

Although Zimmer Biomet signalled a one percent revenue impact, the market reaction was far stronger. Analysts estimated a fall in market value of around two billion dollars as confidence in the programme collapsed.

By September 2025, the company filed a lawsuit seeking at least 172 million dollars. The claim centres on allegations of misrepresentation, premature cut-over advice and aggressive use of change orders. The integrator has responded by pointing to the master services agreement and work order, arguing the programme unfolded within the contractual terms and that the dispute is commercial rather than fraudulent.

Whatever the court eventually decides, the public outcome is clear. A high-profile ERP programme became a commercial, operational and reputational challenge.

The fallout shows how weak SRM affects the entire organisation

Industry sources and practitioner forums also pointed to schedule pressure, business un-readiness and leadership changes around cut-over.

Operational and financial disruption

Public commentary described post go-live operations as unstable, with warehouse activity, order-to-cash and finance all relying on manual fixes. Although the company indicated a one percent revenue impact, analysts pointed to a significantly larger drop in market value as concerns grew about the scale of disruption.

Commercial and contractual imbalance

The programme expanded from 69 million to 94 million dollars through repeated change orders. Critics argue that the commercial model rewarded time rather than results, creating limited leverage and leaving the client exposed to scope shifts and cost escalation.

Governance, maturity and disclosure risks

Our findings in the Global SRM Research show that organisations often overestimate their SRM maturity, and the Zimmer Biomet case reflects several of those gaps. Over confidence in maturity, combined with sole-sourcing a long-standing partner, limited challenge at key decision points. Practitioner commentary also highlighted schedule pressure, business un-readiness and leadership changes around cut-over. The difference between investor communication and later public allegations raised questions about potential disclosure risk.

Programmes that follow this pattern appear frequently across major ERP and digital transformations, which is why SRM discipline and clear governance are so important at the outset.

What stronger SRM would have provided

In our earlier article “Catch the tiger by the tail, managing major consulting organisations”, we noted that if you are not actively managing major suppliers, they are actively managing you.
The Zimmer Biomet story illustrates several of the behaviours we warned about:

• Small initial engagements that grow into major programmes
• Commercial models that protect margin through tight scoping and change control
• Contracts that are strong on time and billing but weaker on clear outcomes
• Deep executive access and stakeholder influence that make challenge difficult

From a State of Flux perspective, several SRM controls appear to have been missing.

a) Segmentation and treatment strategy

A partner of this scale should be formally segmented as strategic. That would normally include a clear treatment strategy, a documented governance model, defined behaviours, cross-functional ownership and clarity on competition and exit options.

b) Joint account planning

A joint account plan forces both sides to align on goals, risks, resourcing and incentives. Public filings suggest the commercial model heavily favoured the integrator through time-based billing, staffing flexibility and numerous client assumptions. A joint plan reviewed at executive level could have driven earlier conversations about cut-over readiness, risk thresholds, resourcing and what success actually meant.

c) Governance that balances trust with control

Major integrators require multi-layered governance, including executive-level forums, balanced programme steering, independent assurance, clear decision rights and agreed behaviours.

In this case, public commentary refers to leadership changes, restructuring and pressure to “go live” despite multiple delays. Mature SRM would have tied commercial milestones to proven readiness and ensured independent checks were binding rather than advisory.

d) Performance and risk management at both project and relationship levels

Large programmes create two sets of risks.
Project risks include milestones, defects and deliverables.
Relationship risks include trust, behaviours, alignment and commercial fairness.

The escalation to litigation and investor concern shows issues at both levels.

Robust SRM would have used structured 360-degree feedback, relationship-level risk logs and corrective plans agreed jointly long before lawyers became the primary point of communication.

Why this matters for every organisation working with large SIs

This case resonates because it is not unusual. Many organisations rely heavily on a handful of major consulting and systems integration partners. Personal networks run deep, which can make challenge uncomfortable. When a programme of this scale then falters, the impact spreads far beyond procurement or IT.

The consequences can include:
• Operational disruption affecting supply chain and customer experience
• Financial impact from remediation costs and delayed benefits
• Legal exposure through disputes and disclosure scrutiny
• Long term relationship damage that ends decades of partnership

The lesson is not to avoid large consulting firms. The lesson is to treat them as strategic suppliers and manage them with the discipline they require.

A practical SRM checklist for major integrators

A robust SRM approach should include:

1. Segmentation and strategy
   Classify major consultancies and SIs as strategic. Define treatment strategies, competition options and exit paths.

2. Commercial model and contract discipline
   Align commercials with measurable outcomes and readiness. Use hold backs, acceptance criteria, service levels and escalation rights that give real leverage.

3. Joint account and programme planning
   Create joint account plans and joint business plans that align incentives and define success for both sides.

4. Multi-level governance and assurance
   Set regular governance forums with clear decision authority. Use independent assurance for risk and readiness, particularly around go or no-go decisions.

5. Behavioural and trust management
   Agree expected behaviours and maintain a relationship charter. Track relationship health through structured feedback and 360-degree reviews.

6. Digital SRM and transparency
   Use SRM systems to track contracts, commitments, risks, actions and performance across the whole relationship.

7. Aligned disclosure and narrative
   Ensure internal, board, investor and regulatory reporting reflect the actual on-the-ground situation. Misalignment increases risk when issues surface.

The Zimmer Biomet case now stands as a clear reminder of how an ERP transformation, a powerful integrator and a long-standing relationship can collide without effective supplier management.

Big consultancies and system integrators are some of the most influential suppliers an organisation has. Without strong SRM, the balance of control shifts quickly.

If you want to strengthen how your organisation manages major consulting and integration partners, we can help you assess your SRM maturity and put in place the governance, controls and behavioural disciplines needed to avoid outcomes like this. Contact us to discuss where to begin.