When to use a crate
Providing a crate is important for at least as long as your dog is not yet house-trained - which likely is the case if you have a new puppy, and possibly is the case if you have a new rescue dog. A house-trained dog is one that will comply with all your house rules. House-trained comprises far more than Housebreaking a dog (potty training, toilet training).
Once your dog is fully house-trained, you can (and should) give your dog free run of the house all the time, ie even when you are away. When fully house-trained, nothing speaks against it, and a LOT speaks for it. Not least, only a German Shepherd that can freely reach every part of the house can be a good protector of every part of the house!
However, it is better to leave the crate in its place even when you are convinced that your dog is fully house-trained: Just like the dog would in nature, your dog may often prefer to retreat to his/her own den, especially when feeling unwell, at night, and when dozing. A small space where your dog can nestle down and feel warm and safe.
Purpose of a crate
The purpose of a crate is to provide your dog with a shelter, a place where the dog can doze, sleep, play with toys while lying down, and chew on the provided chew toy - all while feeling safe.
Conversely, a kennel we consider a place where you can lock your dog away if you fear that (s)he would otherwise say make a mess in your house or frighten small children or whatever - because you have not yet house-trained your dog. If we can agree on this for now, then a kennel will have a lockable door and typically even a roof, while a crate is unlikely to have a roof or a door at all. On the photo you see the crate of My New Puppy which is no more than two panels of thin plywood as wall protection and the Westpaw nap mat because we don't even have a kennel, and because our dogs always have free run of the house.
Vendors and commercial sites do not distinguish crate and kennel as clearly, and indeed they may not offer a crate at all, see next.
What crate to use
Commercial crates are neither necessary nor the most appropriate for your dog's needs. Why?
Dogs need to feel safe when they doze or sleep. Dogs feel safe when they doze or sleep in a place where they feel they can hide, so that they are not seen while not alert, and where they can observe the entrance to their hiding place, so that they can react fast.
This is all the more important for you if you have a German Shepherd as protection dog. The whole idea of having family protection dogs or better, trained protection dogs, fails when you lock your German Shepherd in a kennel or outside in the backyard or garden. German Shepherd barking doesn't give you a German Shepherd protection dog!
Imagine an intruder enters your house through a front window. Yes, the German Shepherd barking will wake you up, but also the intruder will have lots of time to harm you if you "safely" locked away your dog. An experienced intruder will notice immediately whether you have a barking dog that's locked up, or whether you have a dog that is free and waiting to attack him. For more, see Protection dog training.
Best crate for dogs
The best crate for dogs is one that suffices both these primary requirements. In addition, a dog den needs to be warm without being overheated, draft-free, and soft on the ground. Fresh water supply MUST be within the dog's reach, day and night. Don't worry "but the dog will pee at night": Not even a puppy does, as I have clearly documented in the New Puppy Diary.
Therefore, the best crate for dogs is one that's just a wooden box, with one side being open except for a say 2 cm or 1 in threshold, and the other sides reaching just above the dog's body when lying down. The crate floor has a thick blanket like the Westpaw nap mat. Wash the nap mat weekly with a non-smelling and naturally mild cleaning product. The crate has no roof! It is easy to clean by just reaching over the side panels. Put a water bowl in front of the entrance. That's it!
This is the best crate for dogs - not necessarily the best crate for you, and not the best crate for commercial crate producers.
Why is it not necessarily the best crate for you? Because in the beginning, when your dog is not yet house-trained, you may prefer a den for your puppy that has a roof too and is lockable (ie a kennel). Until housebroken a kennel can help reduce potty accidents, and until fully house-trained a kennel can help reduce dog chewing, dog scratching, etc.
With an UNtrained dog you will have to strike a compromise between what's the best crate for dogs long-term and what's the best crate for you in the short-term.
If you do all parts of Dog House Training right, then a German Shepherd puppy can usually be fully house-trained before age six months the latest, while housebroken within a few DAYS! If you work from home or at least one family member is home most of the time, then you may not need to buy a kennel at all!
Do not make the mistake to think "If I get a covered lockable kennel, my puppy can't have potty accidents elsewhere in the house". It doesn't work like this, because you must not lock a puppy away for more than an hour anyway - when the pup needs to empty the small bladder! Any healthy dog will try to avoid to soil the own den for as long as the dog can hold the bladder tight.
What if you fear you won't get the puppy housebreaking right, and your gorgeous German Shepherd puppy may have a few potty accidents in the house? Then you may want to get one of those dog potties as described in Housebreaking a dog, and I would also suggest that then you keep your puppy ideally in a tiled area of your house during the first week or two.
Where to put the crate
Place the crate where there's no permanent running around of family members (say tumultuous children during playtime), no draft, no immediate radiator heat, and no wiring from electrical items like fridges etc. But don't put the crate too far away from where the family members usually remain during the day. Ideal would be a corner of an annex to your living room if you have that.
Why? Because your dog should have the chance to see and hear what's going on in the house, but likewise (s)he should have the chance to back out when (s)he needs to doze or sleep during the day, or when (s)he doesn't feel well.
Do not follow the advice you can find in some places, to regularly change the crate when your puppy grows up, or even to move the crate around between day and night time. This would confuse the instincts of your German Shepherd and may promote aggression and anxiety. Place the crate in its permanent place straight away.
When your puppy grows up, it's best to have no more than one change in size made to the crate. A commercial kennel should have a divider which makes it easy to adapt the size of the kennel to the size of your puppy (but only do it once, about mid-term). A self-made crate you would simply extend to one side.
However, you do not need to do this! It doesn't matter if in the beginning the crate is much larger than your puppy, because in nature a puppy wouldn't have a den of its own size either. Indeed, your German Shepherd puppy likely will be happy and develop well if (s)he has the same crate throughout!
Note that if the crate is in a separate room, always leave the door a bit open so that you don't cut off the German Shepherd's instinct that aims to protect you, and that your dog doesn't feel lonely or anxious either. This is all the more important while you have a puppy, but it is relevant at every age in order to keep your dog calm and healthy.
Benefits of Dog Crate Training and Puppy Crate Training
Once your dog uses the crate voluntarily, the crate will allow your dog more time to retreat from the family action and to relax. This will contribute to your dog's overall health, and it will improve your relationship with your dog when you are together.
In addition, mid- and long-term, Crate training dogs will reduce the amount of required Behavior Training, see House training a puppy. This means, voluntary crate use will reduce dog whining, dog barking, dog separation anxiety, dog aggression, and destructive behaviour.
Finally, crate training dogs helps to prevent that your bed or the couch is becoming your dog's primary domicile, and it also aids the dog housebreaking process if that's still an issue too. In short, crate use is very beneficial regardless of your dog's age.
What a Crate means to a German Shepherd
Under normal circumstances German Shepherds love to use their crates. This has genetic roots and even when you leave a German Shepherd out in the wild, the dog will prepare his/her own small space to nestle down in, so that (s)he keeps warm and safe. A crate performs this function perfectly and is giving your dog a safe space that the dog can consider and guard as his/her own. All dogs need this small place to retreat, especially when feeling unwell, at night, and when dozing.
If you deprive your GSD of this, your dog is likely to become anxious, trying to herd and control the entire room or house. This is the most common reason for destructive behavior. Always remember that German Shepherds are strong and active herding dogs by nature. The use of a kennel is entirely unsuitable for this dog breed!
Your overall aim should be that your German Shepherd uses the crate voluntarily and on his/her own initiative, and that your dog has free run of the house/premises once fully house-trained.
If you have several German Shepherd puppies, give each of them their own crate, but never force them to use their own crate. They will usually use their own crate automatically later, when they feel like it.
Crate training and You
Both you and your German Shepherd will need to learn how to use the crate. For example, it's your dog's crate, not yours, so never pull out the blanket while your GSD is in the crate, and don't step into the crate. Likewise, don't use force to get your German Shepherd into the crate or out of it. Be considerate about this small space which your dog may treat as his/her own. Don't upset your dog or disturb the dog's guarding instinct.