Use Preference variable if you want to change the value of the variable in future. This is specific to a process.
Use DVMs if the variable will be used across different processes.
Use Cross-references if the values will be populated/ changed at runtime by different processes.
Note:
In XSL transformation, you can set a default value instead of using DVM or cross-reference if the value is not going to change in future. For eg: Process name.
Preference variables cannot be used inside an XSL transformation.
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