Entrepreneurial and innovative engineers that are needed by industry either as employers or employees emanate from the universities. However, literature emphasises that there is a need for closing the gap between students' university studies and industry expectation because most students are simply a liability during the early phases of their career life. To bridge such a gap, students should be trained to solve the real world problems using a systematic, integrative approach such as the University-Sponsored Student Business Venture (USSBV) model. The latter should take place in the non-lecturer dominated environment which foster interdisciplinary and hands-on learning approach that provides students with lifelong experiences. This paper presents a case of how the USSBV model could be used in a Learning Factory (LF) as the didactic method for training students to gain the flair of entrepreneurship and innovation. The aim of the training would be for students to apply their theoretical content to a real working environment to experience or establish new ventures that could solve industrial and societal problems. For example, the train safety and ergonomics problems present an opportunity on how the USSBV model could be used to train students in the LF and thereby, give students opportunities of generating ideas as solutions for the problem and be equipped at commercializing those ideas. In this regard, the application of the USSBV model in the LF results in project-based learning and non-lecturer dominated learning environment that source ideas directly from the industry/society. This will develop and enhance students' technical and soft skills (i.e. collaboration, communication, presentation, and critical thinking). Index Terms-Entrepreneurship and innovation, learning factory, non-lecturer environment, open innovation model. I. INTRODUCTION Everyday industrial and system engineering work involves a wide range of activities. Industrial Engineering (IE) draws upon knowledge and skill in the mathematical, physical, business, and social sciences. It combines this knowledge and skills with the principles and methods of engineering analysis and design, to specify, predict, and evaluate the results to design, produce, improve and install integrated systems of people, information and infrastructure. Due to its interdisciplinary and multidisciplinary approach to produce engineering solutions, IE prepares students to be employed in various sectors (i.e. banking, insurance, forestry, manufacturing, management, construction, mines, education, etc). With its flair for inventing new things, IE also prepares students to engage in entrepreneurship and innovation. Entrepreneurship and innovation allow students to employ Manuscript