Industry 5.0 focuses on collaboration between humans and advanced technologies such as artificial intelligence (AI) and collaborative robots. This approach fosters more resilient, sustainable, and human-centric systems while addressing challenges like productivity and supply chain disruptions. By embracing its basic principles, organisations can stay competitive, agile, and future-ready.
Basic principles of industry 5.0
At the heart of Industry 5.0 is the seamless integration of humans and machines to improve outcomes. This principle challenges the narrative of machines replacing human roles, instead focusing on role augmentation. But perfecting this process can be challenging.
“We often hear the phrase ‘human-machine interaction’ (HMI), but the real challenge lies in blending human capabilities with machines to drive better outcomes. That’s where the complexity truly begins.”
At this stage, it remains theoretical, with how-to-implement cases still in their infancy.
For example, in Industry 4.0, digital twins are often referenced – the ability to create a virtual replica of a manufacturing plant to enable scenario planning and gain a deeper understanding of operations within that space. From a human interaction perspective, it is typically an analyst driving the model, adjusting variables, observing outputs, and identifying the best path forward. The type of decision-making involved depends on the specific goals and outcomes being sought with the digital twin.
In Industry 5.0, we’re starting to see potential use cases like integrating VR at an operational level. This could look like running a console within VR that directly impacts and influences the manufacturing floor in real time. These integrations are where we’re beginning to see some exciting possibilities.
Another key principle of Industry 5.0 is sustainability, emphasising the reduction of carbon footprints and the adoption of circular economy practices. Companies are leveraging AI and data analytics to cut waste, implementing end-of-life product strategies to support recycling and reuse, and embedding environmental goals across all stages of operations.
Failing to prioritise sustainability risks eroding competitiveness as it becomes a core focus for consumers and regulators alike. It is now common place to link capital raises to appropriate ESG performance.
The circular economy and sustainability are becoming embedded, whereas before they were more of a consideration than a core part of the framework, however there is still more work to be done as we begin to understand the implications of stronger regulation in NZ and Australia and the impact of scope 3 requirements to supply chains.
The final principle for industry 5.0 is supply chain resilience, which focuses on building agile, adaptable systems to withstand disruptions and ensure continuity. Supply chain resilience prioritises robust risk management through proactive measures to anticipate disruptions, whether from geopolitical shifts or environmental challenges. It also emphasises agility and adaptability, enabling real-time operational adjustments with the support of AI-driven predictive insights.
If you’re not focusing seriously on those areas, you need to consider how to embed them into your business. Some might argue that we’ve over-indexed on resilience due to the lingering fear of another COVID-like disruption. Getting the balance right is key and increasingly we talk about agile supply chains, with an ability to adjust in as near real time as possible.
A vision for next generation supply chains
A number of businesses are starting to discuss the next generation of supply chains. Whether it’s Industry 5.0 or an adaptation of that concept, it is seen as the next evolution – or vision – for the supply chain. The industry appears to be already asking for it, even if not in precise terms.
As a collective, we have a responsibility to move beyond academic definitions and put real substance behind how this vision comes to life. Supply chains are under constant pressure, and that impacts everything – including the cost of living and what ultimately reaches our plates, or the goods and services we consume.
Industry 5.0 is an intriguing concept because it challenges us to improve supply chain efficiency in a way that remains human-centric. Although Industry 4.0 is also human-centric, there is currently a lot of fear in the market around job displacement. Industry 5.0 challenges us to view roles as being augmented rather than replaced.
In Australia and New Zealand, we are grappling with a significant productivity issue, with no clear plan to address it in the near term. This framework offers an opportunity to drive much-needed productivity improvements across our industries.
Bridging industry 4.0 and industry 5.0
While many organisations are still navigating the complexities of Industry 4.0, the emergence of Industry 5.0 introduces an opportunity to leapfrog steps and integrate advanced technologies – such as AI – without heavy reliance on legacy platforms. For example, companies still managing processes through spreadsheets can adopt modular, AI-powered solutions to enhance efficiency without investing in large systems.
At the same time, Generative AI allows for cost-effective, custom tools to bridge gaps between existing processes and modern digital ecosystems. This accelerated approach enables late adopters to bypass slower, incremental transitions and progress directly into next-generation systems. To fully capitalise on this opportunity, organisations need to examine productivity at multiple levels:
At an individual level, it’s about asking: what can people like you, and I do smarter on a day-to-day basis by integrating technology into our work? At a functional level, how can specific areas, like procurement, become more efficient through digitisation, AI, or machine learning? Then, at an industry level, how can we foster greater cooperation?
Industry leaders looking to drive the conversation forward should begin linking next-generation discussions to Industry 5.0, removing distinctions where possible to build momentum.
There are leaders in the industry who can take this step. Some of the bigger players, like those on the frontiers – such as in New Zealand, for instance – may already be thinking about it, even conceptually. The rest of the industry watches them and pays attention to how they lead. Competitive forces will ultimately dictate the direction we take.
The reality is that we’ll get on board with this because it offers better outcomes for people in the industry.
To stay competitive in an evolving landscape, now is the time to explore what Industry 5.0 means for your organisation. By embracing AI-driven tools, sustainability practices, and resilient supply chain frameworks, businesses can enhance productivity while keeping humans at the centre.
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Embracing Industry 5.0
