Besides his Zombies that are pieced together by the parts of dead soldiers of all nations, he also uses a machine to turn soldiers into mechanical spiders (thought they are never directly seen since Army Men: Sarge's Heroes). In addition, Dr. Madd has created the Serum that reverses plastification.
He had built a zombie-making factory on a set of small islands, and had captured an elderly soldier whom Sarge was sent to rescue. The insane scientist himself was present in the middle of the map, typing on his computer and muttering "zombie mode activated" from time to time. If shot at, he teleports away to an unknown location. In the ending cinematic of the game, he appears once again, this time operating on the remains of the traitorous Major Mylar. However, this scene, although foreboding, appears to have been forgotten in the series, perhaps suggesting that he simply used Mylar's plastic to create more zombies. Also, if you fail the mission, Sarge is seen from a face view tied to a cot. He tries to break free but to no avail. A zombie tears his foot off, then puts his hand over his head. Then YOU LOSE.