If a PhD student decides not to pursue a career in academia, when would be an appropriate time to inform their supervisors/department and how should they manage this process? Would the student just forgo the academic job market stage at the end?

If your department is open to it (won't ostra...

If discussing an interest in jobs outside of academia is taboo (nice business school...), in my opinion the best solution would be as you suggested to forgo the academic job market stage at the end. Reasons: first, you can always fake a genuine change of interest at the end of your PhD with such a mentality, your PhD school is unlikely to have strong relations with firms, so they won't be able to have a negative impact on your career informing your supervisors/department is useless for you since they won't help you

If it's taboo, then you don't have to tell them at all.  Go through all of the motions of staying in academia until you have the Ph.d. in hand.

If you're going to continue with your PhD, don't mention it.  As others have said, your supervisor and department probably don't have many connections outside academia and you've indicated such a path is taboo to them.  Telling them will only make them lose interest in you.  I would explore options on my own.  Also, many disciplines have started talking about "non-ac" (non-academic jobs) at conferences.  Try going to those sessions if your field has them.    Same thing goes in business, man, come on.  Even if you look at a job as a stepping stone that you're only going to stay at a few years - you NEVER tell your employer that!  You make them think you're in it for the long haul, that way they nurture and promote you.

You are at a good school. Telling them you dont want to stay in academia is equivalent to telling them you dont want to write an excellent thesis. Dont forget: The key to maximize your choices is to be excellent at what are you doing. Indeed, a bad mistake would be to slack at research because you think excellence in research does not help you to get a job in industry. They might actually not being that much interested in your topic, but they will be able to detect whether you are as excellent as the department they recruit from.