Hi Amrita
It actually depends on if you want to apply your rules after transformation or before Transformation.
if you are going to use DSO - 1 field as it and there is no another look-up on another field like derive material group based on material type and material type is populated in transformation routine
form the performance side start routine is good as you can delete unwanted records and you can store buffer table into internal table which can be used for transformation rules
Regards
Raj