Manufacturing has come a long way. From James Watt’s tinkering came the Steam Engine in 1769, setting in motion the Industrial Revolution over 250 years ago. Now in 2025, Industry 5.0 is a paradigm shift that envisions humans and machines working together. It’s an industrial design philosophy developed to make the next generation leap into the future of machined goods and production. But why should this be consequential to you and your company today? So you can secure future competitive advantage in a world that is increasingly VUCA. Where digital systems work with people, not try to automate around them.
Volatility, Uncertainty, Complexity, and Ambiguity: the VUCA framework is the real world business environment Industry 5.0 aims to address. These are the elements that modern smart factories and digital manufacturing need to be fit to address. How? By formulating new methods and processes that address the collaboration between human-machine, that weave and integrate sustainability throughout the process. It's a new industrial philosophy to enhance resilience throughout the entire production and supply chain, refashioning it to tackle uncertainty and changing market conditions.
"The worldwide Industry 5.0 market is forecast to expand from $65.8 billion (2024) to $255.7 billion (by 2029), an annual growth rate of 31%.”
— MarketsandMarkets
Advancing Manufacturing with Industry 5.0
Industry 5.0, according to the official EU definition, "complements the existing Industry 4.0 paradigm by highlighting research and innovation as drivers for a transition to a sustainable, human-centric and resilient European industry. It moves focus from shareholder to stakeholder value, with benefits for all concerned.”
If you take away the management-speak that means industry benefitting society holistically. Evolving skills and training to empower workers and place them further up the business value chain. Enhancing worker creativity and productivity in concert with robots/machines. Favouring circular production models, that use natural resources more efficiently and provide more effective sustainable product lifecycles. Making sectors more resilient to energy and supply shocks due to geopolitical circumstances.
Many organisations are still mid-way through Industry 4.0 transitions. This previous paradigm placed the emphasis on automation as replacement, on connectivity, IoT (Internet of Things), predictive analytics and cloud compute. It was about optimisation of organisational and production resources through better data and intelligence. According to McKinsey, the implementation of these technologies could provide 85% better forecasting, reduce machine downtime by 30-50%, and increase labour productivity by 15-30% (McKinsey).
IR5.0 differs from IR4.0 because it is focussed on technologies that enable the bigger picture, on strategic implementations for long-term competitiveness, not as narrowly on short-term savings and reductions. Rather than look at automation to reduce workforce, it leverages accumulated worker knowledge and experience to oversee production and assembly with less line management. It allows companies to foster partnerships where robots/machines deal with the repetitive and arduous tasks, while humans focus on innovation, creative work, qualitative oversight and strategic decision-making.
Industry 4.0 asked: "How can we use technology to increase efficiency?” whereas Industry 5.0 posits the question: "How does technology make our workforce more capable and operations more resilient?”
It moves from a techno-economic vision to one that encompasses environmental and social dimensions.
All Revolutions Change Manufacturing
But where does Industry 5.0 sit in a historical context? It’s worth revisiting what innovations were adopted in each era, and what was characteristic of each, so we can see the overall evolution in how value is created in manufacturing and ever more complex supply chain.
Each period fundamentally altered how manufacturers create competitive advantage and what mechanisms and technologies they used to do this.
Industry 1.0 (1760-1840)
Watt’s refinement of Newcomen’s steam engine in 1976 was a key trigger for the first industrial revolution in Britain. Steam power mechanising labour was the catalyst for the first factories, transforming agrarian economies into urban manufacturing centres. In 1775, just a few years after the steam engine, Richard Arkwright developed mills in which the whole process of yarn manufacture was carried out by one machine, and so birthed the modern factory system. Spinning jennies and power looms transformed the textile industry and the landscape of England and North Eastern Europe thereafter.
Key qualities and competitive advantage
Manual labour enhanced/replaced by steam power. Canals and steam trains revolutionised transportation and inventory. Artisanal methods are outpaced by mechanical scale and productivity gains in factory environments.
Industry 2.0 (1871–1914)
Widespread use of electricity, the internal combustion engine and introduction of the assembly line (pioneered by Henry Ford in 1913 to produce the Model T car) makes goods more affordable and accessible. Transport (both road and rail) along with telegraph networks fuelled economic growth and the migration of people and ideas. By forgoing customisation and craft for more efficient duplication, a new wave of consumer goods was enabled through affordability and assembly production.
Key qualities and competitive advantage
Mass production became the new competitive edge. Shipping containers and faster global networks provide more components and order coordination. Standardisation, electrification and the production line allow economies of scale and a surge in wealth creation.
Industry 3.0 (1950s–2000s)
Post World-War 2 saw a peace dividend that spread global trade and a technological boom. The invention of the microprocessor in the 1970s was the foundational critical technology enabling a manufacturing change that moved processes from the analogue to the digital. Programmable logic controls (PLCs) facilitated partial production line automation and enhanced manufacturing precision. Robotics were integrated into industry. Malcolm McLean pioneered containerised shipping in 1956, ushering in integrated transport systems that were a key driver for globalisation.
Key qualities and competitive advantage
Early digital technologies including PLCs, robotics, EDI (electronic data interchange) and personal computing enhanced or replaced many manual operations and oversight. Just-In-Time inventory became commonplace. Faster data flows and physical logistics hubs create global supply chain networks and sophisticated worldwide markets.
Industry 4.0 (2011–present)
The fourth industrial revolution has seen rapid technological advancement and digital transformation within the workplace, initiating smart factories and data-driven logistics. A concept originating in Germany in 2011, IR4 combines physical and digital technologies, including interconnected machines, sensors (IoT – Internet of Things, and RFID), cloud computing and intelligent data systems (AI, machine learning, digital twins, edge computing).
Key qualities and competitive advantage
Connectivity is supercharged over the manufacturing and supply chain, with end-to-end communication, data collection and analytics. It provides enhanced decision making and innovation in production processes. Blockchain and digital tracking technologies are integrated into the supply chain enabling better transparency and auditing. Mass customisation becomes possible, along with better forecasting to minimise inefficiencies. Manufacturing becomes more flexible, iterative and informed over the full ‘value chain’ and ‘product life cycle’.
Industry 5.0 (2020–?)
Increased geopolitical instability (highlighted by the Covid-19 pandemic), emphasised modern manufacturing’s exposure to rapid market changes and the vulnerabilities of rigid systems. AI integration, efficient use of resources (zero-waste), carbon usage and reduction, along with sustainability are paramount to a more holistic view of manufacturing and it’s fit within modern economies. Reverse logistics save resources by offering recycling and longer product lifespans. Advanced robots operate in shared workplaces alongside skilled human workers. Adaptive warehouses with autonomous delivery systems hold dynamic inventory. Humanoid robots are on the horizon. Micro-factories and giga-factories provide customisation, scale and sophistication.
Key qualities and competitive advantage
Human-machine collaboration, and AI as an assistive, additive technology (not a replacer, or simple ‘automator’). Cobots (flexible lightweight robotic systems designed to work in mixed environments with humans), additive manufacturing and 3D industrial printing, digital twins in the supply chain, along with AR-enhanced (augmented reality) assembly and modular agile production lines are hallmarks of industry 5.0. Sustainability and resilience measures are integrated throughout the supply chain and manufacturing to enable competitive advantage, adaptable systems, and circular economy benefits.
"The Al in manutacturing market is projected to reach ~$46 billion by 2030, growing at 47%. The digital twin market is expected to hit ~$150 billion, at a CAGR of ~60%. The collaborative robot market is predicted to reach ~$12 billion at a CAGR of -35% during 2025-2030.”
– MarketsandMarkets
Integrating Human Ingenuity and Automated Systems
For the long term future of the planet, for modern economies, and for the benefit of workers, Industry 5.0 relies on three core pillars of focus. Global goals such as 2050’s net zero target for climate neutrality, and the EU’s stress on sustainability have been key drivers of IR5, with a focus on manufacturing not being extractive but generative and additive for society as a whole. The pillars align around human-centricity, sustainability and resilience.
The Human Touch, with Robot Precision: Human-centricity
Experience and skilled workers are the heartbeat of an organisation. Industry 5.0 elevates them to the valuable assets they are, rather than ‘replaceable resources’. Human capability and insight is augmented by technological speed and precision in this advanced manufacturing structure. Operators implement and design workflows, and oversee assembly and production quality. Cobots do the ‘heavy lifting’.
Cobots can reduce workplace injury incidence by up to 72% by eliminating three leading causes: contact with harmful objects, heavy lifting, repetitive-stress tasks (according to Traveler’s Insurance research). Products can be customised and fine-tuned for clients like never before with AI integration and collaborative robotics systems.
Positive Goals for Planet, People and Profit: Sustainability
Circular economy principles consider longevity, reuse, and recycling from end-to-end in the manufacturing process. Resource efficiency and zero waste principles are great for the planet and the company bottom line. Moving from ‘net neutral’ where these principles are seen as an obstacle and hindrance to production, to ‘net positive’ where positive competitive advantage within the market can be gained from constructive engagement benefits everyone. Digital tracking and provenance of materials (through blockchain or other monitoring), alongside ecological footprint tracking and data analytics, manage environmental impact, carbon emissions and resource use. Usage of ‘digital twins’ to optimise production processes offer major sustainability improvements, reducing energy consumption by up to 30% and CO2 by 25%.
From Disruption to Agility: Resilience
Predictive logistics intelligence through realtime data and sensor tracking, strategic buffer-stock protocols tuned to consumption not theory, and diversified supplier networks through expert supply chain knowledge and relationships can create an environment of anti-fragility where a company benefits from disruption (through robust market positioning and agility compared with sector competitors) rather than collapses under the pressure.
Industry 5.0: Corporate Mirage to Competitive Advantage
For more than 250 years, the five transformative industrial revolutions have each in turn redefined competitive advantage. Steam power enabled the factory. Electricity and assembly enabled mass production. Digital communications enabled globalisation. Connectivity and sensors enabled optimisation and automation. Now human-machine collaboration enables resilience and responsible production.
The lessons of each of these revolutions? Manufacturers who adopt new production methods and technologies, who create robust supply chain partnerships and networks — reacting proactively to technology shifts — establish positions that competitors find difficult to catch up to.
Advanced technology adopters are associated with 19% higher turnover per worker. Combine that with high-performing management practices and the advantage jumps to 43% (ONS). Industry 5.0 is not a distant future. It is a transformative philosophy being implemented now by manufacturers who value resilience and adaptability over pure automative efficiency and bare bottom line when markets are volatile.
Manufacturers capturing competitive advantage right now treat logistics as production intelligence and anti-fragile resource, not reductively as a cost centre to minimise. Get your material flow in order (with fine-tuned buffer stock, inventory agility and lead-time visibility). Build a resilient supplier network (with diversification, provenance, and relationship depth). Refine data intelligence (MRP and warehouse/operations/supplier intelligence integrations, and real-time tracking). Do this and you become part of the spearhead of the next industrial revolution.
Sources: — European Commission Industrial research and innovation, Industry 5.0, EU. — Future of Manufacturing Market report, MarketsandMarkets, 2024. — Capturing the true value of Industry 4.0, McKinsey, 2022. — Industry 5.0: Towards a sustainable, human-centric and resilient European industry, European Commission, Breque et al. — Management practices and the adoption of technology and artificial intelligence in UK firms, ONS Office of National Statistics, UK
Acorn as your partner in the next revolution
Industry 5.0 asks that you put people and technology together for better production.
Acorn helps UK OEMs do just that. Through connected logistics, bespoke intelligent warehousing solutions, dynamic component flow, and measurable uptime gains and delivery-on-time performance.
