This paper proposes the Smart Virtual Product Development (SVPD) system, which enhances the industrial product manufacturing processes. The proposed system comprises of three main modules: design knowledge management (DKM), manufacturing capability analysis and process planning (MCAPP), and product inspection planning (PIP). Smart virtual product development system collects, stores, and uses experiential knowledge from formal decisional events in the form of set of experience (SOE). This research explains the working mechanism of MCAPP module, and shows how manufacturing knowledge of similar products having some common features and functions is used to enrich the manufacturing process. First, the basic description and principles of the approach are introduced, then the prototype version of the system is developed and tested for manufacturing capability and process planning (MCAPP) module for the case study, which verifies the feasibility of the proposed approach. The presented system successfully supports smart manufacturing, and can play a vital role in Industry 4.0.