A company might keep customer names in its CRM, its accounting software and a marketing tool, and all three can drift out of sync as records are updated in only one place. Naming the CRM as the system of record for contact details settles which version wins when they disagree, and every integration is built to treat it that way.
The common mistake is never actually deciding, so each team quietly treats its own system as authoritative and nobody notices the conflict until a report does not add up or an automation acts on the wrong version of a record. Naming a system of record does not fix data quality by itself, but it gives a clear place to fix it.