The article discusses the challenges and the potential approaches of competence-based programmes for higher education institutions, starting at their inception in the Bologna process. It focuses particularly on curriculum transformation and implementation of action-orientated learning concepts. Consequently, the article takes stock of recent learning factory approaches in Germany and identifies the gap between research and practice. It presents a new approach to apply a concept of competence and the corresponding didactical design, which has been implemented and evaluated in a learning factory run by the Center for Industrial Productivity at the Technical University of Darmstadt. The presented insights are based on multiple studies outlining curricular and methodological implementations of the competency model and its didactical framework. Furthermore, specific examples of application, qualitative results, and conclusions regarding two third-party funded projects will be laid out in detail. The article concludes by summarizing the findings related to future challenges for higher education.