How to allocate Tax Rates and Rules generated for specific items and ship-to locations

Summary:

Is it possible to set up specific manufacturing items to route through different tax rates via tax rules based on item and geographies? We are currently paying the default tax rates on all items, regardless of whether they qualify for the reduced rate based on manufacturing/location, and this results in missed opportunities in paying less in taxes, which in practice means we're spending more money unnecessarily.

Is there a walk-through document that indicates what should be created and in what order? Further, is there a recommendation on whether a tax classification should be applied to each individual item that may be pushed through the system with the alternate rate? Or, is it better to use purchase category or create a new purchase category to define which items would qualify for the tax rule? Is there a recommendation on whether supplier settings should be taken into consideration?