Teaching in higher education is often challenging for the lack of practical implementation and difficulties in student involvement. In engineering classes, students are often deeply involved in computer laboratories and projects in which they are challenged with decision-making problems. The lack of the real system that is being modelled may hinder the effectiveness of the teaching activities. In this paper, we propose a new teaching approach based on the student’s interaction with lab-scale models of manufacturing systems. Students have the possibility to make observations, collect data, and implement improvements to a system, all within a course duration. The flexibility of the proposed approach enables its application to a wide range of courses, for instance manufacturing system engineering, production management, Industry 4.0. As case study, we target a course on simulation of manufacturing systems for industrial and mechanical engineering, in which students are asked to build, validate, and use a discrete event simulation model of a production system. The application of this project methodology changed the way of teaching simulation in the course and significantly improved students’ evaluation and satisfaction.