Shipbuilding industries have been struggling to reduce production time and cost of their products in many aspects. Manufacturing systems have been changed, new production lines and robots have been installed, and new planning and scheduling systems have been adopted in order to achieve shorter time-to-market and higher productivity. Simulation based manufacturing, digital manufacturing, or virtual manufacturing simulation, whatever the name means, is an approach to achieve such a goal. In order to improve productivity in a shipbuilding process at a shipyard, a digital shipyard development has been driven. This paper proposed how to implement the digital shipyard, what to do with it, and what to obtain from it. This digital shipyard will help simulate and optimize the entire shipbuilding life cycle with its virtual environment through shipbuilding process from the initial development stage to the launch.